PAL tells Congress hearing: 'We need spin-off to survive'

By EMMIE V. ABADILLA
November 11, 2010, 7:41pm
Manila Bulletin

MANILA, Philippines – Philippine Airlines (PAL) told Congress on Wednesday that its corporate restructuring and spin-off programs are necessary to ensure its 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.

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.

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).

Complaints by PALEA officers and other militant groups that the DOLE ruling trampled on workers’ rights have no factual or legal justification, Bautista stressed.

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 added. 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.

Hiring third party service providers after PAL decided to close down its non-core units is not ‘contractualization’ as the union claims, the PAL CEO pointed out. "Twice, DOLE upheld PAL’s position that the planned spin-off ‘is a matter of sound business judgment’ in order to maintain the survival of the company in a globally competitive airline industry."