PAL refuses to take back former workers

Business Mirror
Lenie Lectura
Sunday, October 2, 2011,  21:18

PHILIPPINE Airlines (PAL) refused to take back former employees in its catering, ground handling and call-center reservations as the flag carrier’s outsourcing program took effect on Saturday.
The airline said the former employees had offered to return to work in exchange for keeping their old posts. But PAL is not taking them back.

“As of midnight October 1, workers in our catering, ground handling and call-center reservations units have ceased to be PAL employees. Hence, they have no right to demand or tell the airline how to run its business,” PAL President Jaime Bautista said on Saturday.

He added that Gerry Rivera and Bong Palad have also ceased to be PAL employees and were, therefore, no longer recognized by PAL as leaders of the PAL Employees Association (Palea). “They have no authority to negotiate for and in behalf of PAL workers,” Bautista said.

PAL management cited other reasons it won’t recall its former workers. For one, it said, the outsourcing plan is now in full swing and service providers have taken over the functions of the three departments. Bautista said anyone who wishes to render work must apply with these providers.

PAL also said it will only take back its former workers if there is a court order mandating it to do so; so far, there is none.

PAL said its former workers have caused damage to the airline’s equipment during their September 27 wildcat strike and Bautista said there’s no guarantee they won’t do that again.

Bautista also said mixing former PAL workers with volunteers and service providers poses grave risk to the men and women who have worked so hard to keep the airline flying. He said it would be most unfair to expose them to possible harassment and physical harm.

“PAL is slowly returning to normalcy, thanks to the selfless dedication of our admin volunteers and the help of our service providers,” Bautista said.

He assured PAL passengers that from the current 70 percent, the airline’s flights will be back to pre-strike levels in the next few weeks. Bautista said its service providers are doing their best to hire skilled workers to fill part of the vacuum left by its former personnel.

“We must understand that they were required by the DOLE and Malacañang to absorb all former PAL employees. Now that these workers have shown that they’re not interested, the service providers are working double-time to recruit the people they need,” he said.

PAL expects to save $50 million a year from its outsourcing program.

PAL has borrowed a total of $150 million from Credit Suisse to finance the flag carrier’s outsourcing, working capital and capital expenditure, its Chief Financial Officer Jose Gabriel Olives said last week.

An initial $50 million was already disbursed to the flag carrier.  This amount had been allocated to partly fund the P2.5-billion outsourcing program.

“The $50 million to $60 million will be drawn in the next 30 to 60 days,” Olives said. “This will be used for our working capital this fiscal year.”

The remaining amount will be used for other capital expenditures, he said, adding that the balance will be drawn “when we need it.”

PAL will take delivery of two Boeing 777 next year and two more in 2013. It also expects the delivery of two Airbus A320s in June and November next year and two more by July and November in 2013.

“We already got financing for the pre-delivery payments of some of the aircraft mentioned. We initially borrowed $40 million from local banks,” he said.

At last Friday’s PAL Holdings annual meeting, Bautista said the flag carrier expects to post a net loss for the first half of its fiscal year due to spiraling jet fuel cost and low appetite for travel. “We are looking at loss for the first half. The demand for the first quarter was down because we were affected by the downgrading of the US, plus fuel prices continue to go up. These affected our bottom line,” he said.

PAL Holdings owns about 85 percent of PAL. The flag carrier’s fiscal year ends in March.

PAL suffered a net loss of $10.6 million from April to June this year on account of higher fuel prices—its biggest expense item—and political unrest in the Middle East.

Bautista said he is “cautiously optimistic” that the airline will recover soon.

“It is possible that we may post a net loss for our entire fiscal year but it is also possible that we may recover,” he said.

(With Sara Susanne D. Fabunan)