PAL Offers P477-M Shares to Employees, Unions

Isyu

Thursday, October 31, 1996

Money

PHILIPPINE Airlines has announced the offering of company stocks, worth P477 million, to its employees in fulfillment of an earlier commitment to make them part-owners of the company.

The stock offering is also considered to partially meet the cash components of economic benefits being demanded by the three unions in PAL under separate collective bargaining agreements with the management.

Jose Antonio Garcia, PAL President and Chief Operating Officer, told a press conference at the PAL executive offices at Allied Bank Center in Makati that the unsubscribed shares will be made available to employees and the union at P5 per share.

He said management could only offer these shares at this time due to the previously unresolved shareholders representation issue. A recent favorable development for the stock offering was the waiver by government financial institutions with minority interests in PAL of their right to subscribe to the new PAL shares. The airline's stockholders during the last annual meeting unanimously approved the increase in capitalization from P5 billion to P10 billion. This paved the way for the Lucio Tan group to be the controlling shareholders of PAL.

Garcia said the PAL Board of Directors agreed to the stock offering to partially defray the cost of labor demands for more benefits in spite of company losses.

In particular, the stock offering is an effort by PAL management to address the demands of the PAL Employees' Association (Palea) and the two other unions—Airline Pilots Association of the Philippines (Alpap) and Flight Attendants and Stewards Association of the Philippines (Fasap).

Palea's demand amounts to an additional P3.2 billion over a two-year period. Palea has threatened to strike unless their demands are met.

The strike threat was posed despite stern warning from the Department of Labor and Employment (DOLE) in two assumption orders issued on October 18 and 24, enjoining the union to cease and desist from committing any acts that will exacerbate the situation.

The DOLE'S National Conciliation and Mediation Board considered the new issues raised by Palea as mere grievances that can be resolved under the grievance machinery of the CBA.

Garcia explained that when Palea filed a Notice of Strike on October 4, the issue strayed from the CBA and shifted instead to the position of the 40 union officers dismissed by management for leading a wild-cat strike in 1994, declared illegal by the DOLE.

Although dismissed from the company, the 40 unionists still wield strong influence on the union and union policies by their majority in the 21-member Palea board.

Their position, along with those of 141 unionists temporarily reinstated, is pending before the Supreme Court.

PAL Workers Plan to Strike Before APEC Summit

The Asian Wall Street Journal

Wednesday, October 30, 1996

An ASIAN WALL STREET JOURNAL Roundup

MANILA — Philippine Airlines workers will defy a government order and stage a wildcat strike shortly before a summit of 18 Asian-Pacific leaders next month, union officials said.

An alliance of 1,400 unions, including those at Manila Electric Co. and Philippine Long Distance Telephone Co., said they will support the PAL strike.

A strike at the national flag carrier during the Asia-Pacific Economic Cooperation summit could seriously undermine the government's efforts to showcase the Philippines as a newly attractive investment location.

Alexander Barrientos, President of the 9,000-strong PAL Employees' Association, said the union decided to strike because management is hiring contractual workers instead of regular employees.

PAL corporate secretary Antonio Ocampo said management regrets the union's strike decision and will prepare plans to minimize its impact. He said PAL will reduce flights to areas where other airlines are available and redirect them to areas where PAL is the only carrier.

PAL workers urged President Fidel Ramos to intervene in the dispute to avert the strike before the APEC summit.

"We are pleading for ... your timely intervention to douse the fuming anger of our members, which (we) strongly feel might trigger a timely mass action," the three PAL unions said in a letter to Mr. Ramos.

On Oct. 4, the PALEA filed a strike notice with the Labor Department. Two other PAL unions representing pilots and flight attendants had filed strike notices earlier.

PAL Board Okays Plan to Sell 95 Million Shares to Employees

Business World

Tuesday, October 29, 1996

By LARINA G. PEREZ, Senior Reporter

The Philippine Airlines (PAL) board of directors has agreed to offer 95 million shares of the airline worth P477 million to its employees now that the ownership squabble among its stockholders has been resolved.

Industry observers see this move as the management's way of meeting the demands of its union for additional compensation.

In a press conference yesterday, Jose Antonio Garcia, PAL President and Chief Operating Officer, said the shares will be made available to employees at P5 per share.

The 95 million unsubscribed shares account for about 4.75% of PAL's total capital stock. The stockholders of the airline agreed to increase its capital stock from one billion shares to two billion in a meeting last September 10.

Sources at PAL told Business World the airline's board of directors approved the offering of the shares to its employees in previous board meetings even before the infighting among its owners intensified.

However, Mr. Garcia said management could not offer the shares while the ownership issue was still unresolved.

WAIVING OF RIGHTS

The 95 million shares will be offered to airline employees after the Bank of the Philippine Islands (BPI) of the Ayala group waived its rights to subscribe to the additional PAL shares.

However, seven stockholders of Cumulus Holdings Corp., also of the Ayala group, have subscribed about 28 million shares of the airline's capital stock.

The stockholders of PAL have agreed that if any of the members of Ayala group waived its preemptive rights to subscribe to additional PAL shares, the government financial institutions (GFIs) with interests in the airline will have the first crack at taking up those shares.

The GFIs are the Development Bank of the Philippines, Philippine National Bank, Armed Forces of the Philippines-Retirement Separation and Benefits System, Land Bank of the Philippines and the Government Service Insurance System.

However, the proposal to offer the shares to the employees came from the government itself. The GFIs earlier agreed to waive their preemptive rights to subscribe to additional PAL shares in favor of the Lucio Tan group. With the government's waiver, Mr. Tan now controls 56.66% of PAL.

But if the employees fail to avail of the offer, Mr. Tan's group will be given the right to subscribe to the additional PAL shares.

PAL Ok's Sale of Shares to Employees

Business World

Tuesday, October 29, 1996

The board of directors of Philippine Airlines (PAL) has agreed to offer 95 million shares of the airline worth P477 million to its employees now that the ownership squabble among its stockholders has been resolved. Industry observers see this move as management's way of meeting the demands of its union for additional compensation. In a press conference yesterday, Jose Antonio Garcia, PAL President and Chief Operating Officer, said the shares will be made available to employees at P5 per share.

PAL Warns Union vs. Disrupting Operations

Sun Star Daily

Thursday, October 24, 1996

THE management of Philippine Airlines (PAL) yesterday warned airline union members against participating in activities that would disrupt PAL's operations while the labor dispute with the ground personnel continues.

In a press statement, PAL also assured that contingency measures are being implemented to avoid inconvenience to passengers.

PAL said union members who would participate in any illegal activities may face disciplinary action or dismissal.

PAL said "misinformed" counsel have advised union members that a strike could be legally staged based on new issues raised by the PAL Employees' Association (Palea).

The labor dispute is now under the jurisdiction of the Department of Labor and Employment (Dole) after a dead-lock in CBA negotiations. PR

Labor Boss Prohibits PAL Worker's Strike

The Freeman

Sunday, October 20, 1996

By MILDRED V. GALARPE

Staff Member

THE Office of the Secretary of Labor and Employment has assumed jurisdiction over the labor dispute between the Philippine Airlines and the Philippine Airlines Employees' Association.

This came after PAL already invoked the assumptive powers of the Office of the Secretary of Labor and Employment over the labor dispute with PALEA.

The assumption of DOLE on the case means that any strike or lockout, actual or imminent is now a prohibited activity. Labor Secretary Leonardo Quisumbing in his order dated October 18, 1996, said.

The parties are strictly enjoined to cease and desist from committing any acts that will exacerbate the situation.

The secretary said that a work stoppage at PAL, at a time when the country is busy with the preparation for the upcoming Asia-Pacific Economic Conference and with APEC conferences already going on will certainly cause international embarrassment to the country.

At the same time, a work stoppage will adversely affect economically other business entities whose activities are closely intertwined with PAL.

But above all, disruption of the operations of PAL will unduly deprive the government of the much needed revenues to fund critical development projects.

A work stoppage. Quisumbing said, will also affect the economic viability of PAL which has already been suffering from financial losses during the past few years and not just this, it will also cause serious financial hardships on its 1,400 employees and their dependents whose source of livelihood is now at risk.

Quisumbing said that to expedite the resolution of the dispute, the parties are directed to submit their position papers and other pertinent and material document to his office within ten days.

PALEA has accused PAL of unfair labor practice such as check-off shortage, delay in the check-off remittance, threats of sanctions to officers and members, discrimination in granting increase to flight dispatchers and etc.

They filed on October 4. 1996 a Notice of Strike with the National Conciliation and Mediation Board and in the conferences conducted on October 10, 15 and 18, no settlement was reached.

PALEA members earlier conducted a strike vote in October 15 and submitted the results to the NCMB, National Capital Region. A strike at PAL is imminent.

Quisumbing said that the national government has a substantial equity at PAL and aside from that, it is the country's flag-carrier, and a great deal of commercial and industrial trade, domestic and international is dependent upon its continued and unhampered operation.