PhilippineAirlines: PAL needs restructuring, spin off to survive!

Philippine Airlines
told Congress today (November 10, 2010) that its corporate restructuring and spin-off programs are necessary to ensure the flag carrier’s continued survival in a cut-throat airline industry buffeted by massive losses in the last two years.

Speaking before the House Committee on Labor, PAL President and CEO Jaime Bautista maintained that the recent decision of the Department of Labor and Employment (DOLE) affirming PAL management’s prerogative to restructure its organization “is based on solid legal grounds.” It also provides a generous separation package to about 2,600 affected workers.

He said the DOLE decision allows PAL to spin-off or sell three of its non-core units such as in-flight catering, airport services and call center reservations and contract the same to third party service providers. The agency also ruled that the termination of affected employees as a result of the spin off is in accordance with law, and that PAL is not liable for any unfair labor practice as a result of said termination.

Bautista said Labor Secretary Rosalinda Baldoz based her October 29, 2010 Order on pertinent provisions of the Labor Code, Civil Code, past rulings of the National Labor Relations Commission (NLRC), Supreme Court decisions and the current collective bargaining agreement (CBA) between PAL and the PAL Employees Association (PALEA).

He said complaints by PALEA officers and other militant groups that the DOLE ruling trampled on workers’ rights have no factual or legal justification. He stressed that PAL’s string of massive losses in the last two years amounting to US$312-million or almost P15-billion necessitated the spin-off to ensure PAL’s continued survival. He said the sale of the three non-core units was only done as a last resort after 14 major cost-cutting measures proved inadequate to guarantee PAL’s continued operations. He also stressed that hiring third party service providers after PAL decided to close down its non-core units is not ‘contractualization’ as the union claims.

“DOLE upheld not only once, but twice, PAL’s position that the planned spin-off ‘is a matter of sound business judgment… in order to maintain the survival and sound financial health of the company in a globally competitive airline industry’," Bautista said.

He explained that PAL’s spin-off move was spurred by the need to restructure and reduce costs to be sustainably viable. This, he said, were done by many airlines worldwide which are now experiencing the current rebound as reported by the International Air Transport Association.

Had DOLE ruled against PAL’s restructing plan, Bautista said the airline and all other businesses in the Philippines would be placed in a very difficult situation. “Local and foreign investors would shy away from the country if businesses are barred from exercising their right to control and manage the course and direction of their respective enterprises,” he told lawmakers.

Meanwhile, Bautista begged off from discussing in detail the issues related to alleged age and gender discrimination, maternity benefits and additional pay for PAL’s flight attendants, stressing that the same are currently pending litigation before the labor department and Commission on Human Rights.

The PAL spin-off plan as approved by DOLE was estimated to cost the airline some P2.5-billion broken down as follows: workers’ separation pay equivalent to 125% of their monthly salary for every year of service; a one-time cash gratuity of P50,000 per worker; commutation of 100% of their vacation and sick leave credits to cash; free plane tickets depending on years of service; one year extension of hospitalization benefits; and employment with the third party service providers with guaranteed payment for one year of whatever salary is granted by their new employers.- Philippine Airlines.

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PAL News: PAL seeks dismissal of union’s strike notice

Philippine Airlines (PAL) today (Nov. 11, 2010) sought dismissal of the second Notice of Strike (NOS) filed by the PAL Employees Association (PALEA) last November 5, saying the issues being raised by union officials have already been decided when the labor department upheld PAL’s planned spin-off as a valid exercise of management prerogative.
During today's second conciliation meeting at the National Conciliation and Mediation Board (NCMB), PAL said the union’s claim that the airline management was directly negotiating with union members has no basis.

“It’s simply illogical for PAL to ‘bargain’ or even attempt to negotiate directly with individual rank-and-file workers after it has already secured a favorable decision from DOLE upholding its right to spin off and retire its workers in the process,” said PAL spokesperson Cielo Villaluna.

In the same manner, she said claims of Unfair Labor Practice (ULP) and union busting due to the planned spin off have already been ruled upon by Labor Secretary Rosalinda Baldoz.

“There is no attempt by the PAL management to ‘restrain, coerce or interfere’ with the workers’ exercise right to self organization – which are basic elements of ULP. Since DOLE already ruled that the spin off is valid and stands on solid legal grounds, the union’s claim of unfair labor practice cannot hold water,” Villaluna stressed.

Meanwhile, she said PALEA's public threat to proceed with a strike – even in the event of a possible assumption of jurisdiction over PALEA’s complaint – is a clear indication of the union's intention to ignore the rule of law. It likewise shows disrespect for the Secretary of Labor and her office which has primary jurisdiction over labor disputes, Villaluna added.

During Wednesday's (Nov. 10) public hearing at the House Committee on Labor, PALEA President Gerry Rivera openly declared the union's plan to proceed with the strike vote and stage a strike notwithstanding a possible assumption of jurisdiction order by DOLE.

"PALEA's threats to stage a strike and ignore legal processes is tantamount to ‘taking the law into one’s hands,’ which does not speak well of the organization that lodged a complaint before DOLE in the first place,” Villaluna added.

She said strike threats only serve to scare away passengers especially during the coming holiday peak season. This could push the airline into further financial difficulty which is the very reason for its planned spin off.