PAL: 2,600 WORKERS FACING LAYOFF TO GET S$30,236 EACH FROM STATE BANKS?
MANILA, NOVEMBER 5, 2010 (YAHOO ASIA) from ASIAONE NEWS SERVICE - The 2,600 workers of Philippine Airlines (PAL) facing retrenchment as a result of the spin-off of noncore services will receive, on average, close to P1 million (S$30,236) in severance benefits, with the restructuring expected to cost the flag carrier P2.5 billion (S$75.6 million).
"Some will receive more than a million pesos, some will receive P500,000 (S$15,118). But the average will be P900,000-P950,000, (S$27,212-S$28,724)" PAL president and chief executive officer Jaime Bautista said Wednesday.
PAL expects to save P600 million (S$18.1 million) a year from outsourcing its in-flight catering, cargo handling and call center reservations, a move it hopes will allow it to offer lower fares.
The outsourcing is also expected to help the company attract new investors and improve services.
At a briefing at the Century Park Hotel in Manila, Bautista said the cost of outsourcing the services was originally pegged at P2 billion (S$60.5 million) in the initial decision of the Department of Labor and Employment (DoLE) approving the plan.
But Labor Secretary Rosalinda Baldoz's ruling last week raised the figure by P500 million (S$15.1 million) "due to enhanced separation benefits and other modifications in the financial and noncash awards" for employees who would be laid off as a result, PAL said.
Bitter pill
Bautista said the additional cost was a "bitter pill to swallow," and the company was hard put to raise the amount.
"The P500-million additional cost is a heavy burden for the finances of PAL, considering that we lost almost P15 billion (S$453.5 million) in the last two years. But in spite of the heavy burden, PAL will try its best to source the funds needed so that the benefits will be paid to employees of PAL," he said.
Bautista said PAL would finance the cost of the program through borrowings.
"We'll try to borrow, if possible from government banks, and if not, we will try our best to talk to some of our creditors," he said.
Bautista said the package was more than provided for by law and more than provided for by the CBA (collective bargaining agreement).
Just, legal
But he said DoLE's decision was "just, humane and legal," and that PAL did not wish to be remembered for 2,600 jobs lost, but rather, for 4,000 jobs saved.
Bautista said PAL would finance the separation benefits by securing loans from government financial institutions like the Development Bank of the Philippines or Land Bank of the Philippines.
In response to allegations by the Philippine Airlines Employees Association (PALEA) that the move would lead to contractualization, Bautista said all the terminated employees would be absorbed by third-party service providers as regular employees, although they must still pass the mandated six-month probationary period.
The severance package for the affected employees will include payment of 1.25 month worth of salary for every year of service, a gratuity of P50,000 (S$1,512) for each employee, 100 percent of accumulated unused vacation leaves, 100 percent accumulated sick leaves and medical benefits for one year.
Free tickets
"On top of that, we will give free tickets for them and members of their families depending on their length of service with PAL," Bautista said.
He said PAL was the only carrier in Asia which operated its own catering, call reservation and airport services, and that the practice in the airline industry was to contract these to service providers.
He said PAL had already signed agreements with third-party providers-SPi Global Holdings Inc. for call center reservations, Sky Kitchen for catering and Sky Logistics for airport services.
SPi Global Holdings is a subsidiary of Philippine Long Distance Telephone Co.
Sky Kitchen and Sky Logistics, both newly formed companies, are controlled by businessman Manny Osmena, who also has a stake in Cebu Pacific Catering Services (not related to the airline).
Cebu Pacific Catering is partly owned by PAL sister firm Macroasia Corp.
Bautista said the agreements with the third parties were signed in the early part of the year after PAL had first given notice of the restructuring plan.
Adopt best practice
The DoLE decision will take effect 10 days after receipt of the decision by the parties.
PAL said it hoped to finally implement its corporate restructuring to stabilize finances and expand and improve services, enabling the flag carrier to compete with rival airlines.
"For us to be able to compete with the mega carriers of Asia, the low-cost carriers here in the Philippines, we need to innovate. We need to change the way we do business. We need to adopt the best practices in the industry, and this program is not really meant to retrench our employees. This is a program of survival for Philippine Airlines," Bautista said.
He said he hoped the outsourcing of services would be implemented within the year.
Other departments
Bautista said PALEA would continue to exist, as there would remain 1,500 members in other departments, including finance, marketing and the like, which would not be affected by the restructuring plan.
Asked if PAL had plans to downsize its medical, information technology and human resources units, Bautista said the company was not closed to the idea.
"Those are departments that can also be absorbed. As of now, they are not part of the [restructuring] project, but if given the chance, we'll also file it and implement it, if possible," he said.
Appeal
PALEA plans to ask the Court of Appeals to review the labor department's decision, which the union said would lead to the mass "contractualization" of thousands of workers.
In Bacolod City, the Negros Labor Coalition called for a nationwide strike and civil disobedience to protest Baldoz's ruling.
In the House of Representatives, a committee headed by Northern Samar Rep. Emil Ong will look into the labor unrest in PAL when the chamber resumes sessions next week. -Philippine Daily Inquirer/ANN
PAL wants state banks to finance P2.5-B separation package FROM BUSINESS WORLD Corporate News Posted on 10:03 PM, November 03, 2010
TROUBLED PHILIPPINE Airlines, Inc. (PAL) wants the government to finance the cost of its plan to outsource three key units, particularly the P2.5-billion separation package for workers set to be laid off.
The compensation package has gone up by P500 million after the Labor department ordered adjustments in last week's ruling that upheld the outsourcing plan.
"We are doing this early retirement [scheme] as a measure of survival. We want to be remembered for the 4,000 jobs we had saved and not the 2,600 jobs that will be affected by the program. We are estimating to save P500 million to P1 billion annually from the spin-off," PAL President Jaime J. Bautista told reporters.
The Labor department already ruled in favor of PAL in June after taking over a dispute with the PAL Employees' Association (PALEA) to prevent a strike.
"To finance the compensation package, we will be borrowing from government banks. If not, we will talk to some of our creditors," Mr. Bautista said.
He said the Lucio C. Tan-led carrier, which went out of corporate rehabilitation in 2007, wanted to secure loans from government financial institutions such as the Development Bank of the Philippines and Land Bank of the Philippines, as well as foreign creditors.
The spin-off involves the sale of non-core units namely in-flight catering, airport services, and call center services, affecting some 2,600 rank-and-file employees.
"PAL management plans to implement the appropriate provisions of the Labor department's decision after the prescriptive period for further legal remedies has lapsed," Mr. Bautista said. "Both parties have a period of 15 days from the issuance of the decision to file their respective motions. If no motion is filed, the decision shall be rendered final and executory," he said. Without the spin-off, the flag carrier will shut down and all 7,500 workers will be displaced without separation pay, he said.
Early this year, the firm signed agreements with ePLDT Ventus, Inc. to outsource call center operations and Manuel Osmeña-led Sky Logistics and Sky Kitchen for airport and catering services.
In the decision last week, the Labor department said PALEA's charges of unfair labor practice against PAL had no basis, as the planned outsourcing was "just, reasonable, humane and [a] lawful exercise of [management's] prerogative to reorganize the corporate structure of its operations."
But PAL was ordered to increase the separation pay by 1.25% per year of service, pay an extra P50,000 per affected employee, and provide one year of medical and hospitalization benefits.
PAL claims to have lost $312 million over the last two years due to the global recession, volatile fuel prices, failure to expand operations in the United States because of the country's poor aviation security standards, and competition with low-cost carriers. -- Aura Marie P. Dagcutan
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