Business World
October 22, 2009
By Louella D. Desiderio
RANK-AND-FILE Philippine Airlines (PAL) employees are seeking discussions with the airline management outside the Labor department’s supervision on the company’s plan to outsource "non-core" services.
PAL Employees Association (PALEA) President Edgardo C. Oredina said in a telephone interview yesterday that the group has sent a letter to PAL Chairman Lucio C. Tan asking the management to reconsider its plan to outsource ground-handling jobs.
He said the group stated in the letter that it was willing to forge a compromise agreement to help the management cope with the economic downturn. "We would like to discuss with the PAL management other cost-saving measures to address the crisis and prevent the implementation of the outsourcing plan," he said.
The management’s decision to outsource, he said, came at a time when union members were suffering from the harsh effects of tropical storm Ondoy.
The letter was submitted to the office of Mr. Tan on Oct. 8, the same date that PALEA asked for a suspension of preventive mediation at the National Mediation and Conciliation Board.
"We opted to suspend the proceedings because nothing is happening. There is no change in PAL’s position on the planned outsourcing," Mr. Oredina said.
With no hope of reaching an agreement with the PAL management, the group had considered taking "mass action" to oppose the outsourcing plan, which the union claims will leave as much as 4,000 workers jobless.
He said the group later decided to defer protests after PAL President Jaime J. Bautista informed him by telephone last week that the serving of notices of termination to employees under departments set to be outsourced would not push through and that the management would meet with the PALEA for further talks.
The talks, he said would likely take place next week.
Mr. Bautista could not be reached for comment yesterday.
On Sept. 22, PALEA filed a request for preventive mediation at the Labor department over the airline’s plan to outsource services including catering, passenger handling, ramp handling, and cargo-handling operations.
The plan was disclosed by Mr. Bautista to union officials in a notice dated Sept. 9. In the notice, Mr. Bautista said some services needed to be outsourced to prevent further losses and preserve the airline’s assets.
PAL has more than 8,000 employees, with half belonging to the rank-and-file union.
In 1998, PAL was forced to go into receivership in the aftermath of the Asian crisis. It returned to profit in 2000 and was declared in financial health two years ago.
For the fiscal year ending March, PAL lost $301.4 million as a result of higher expenses brought about by the cost of operating more flights and last year’s record-high fuel prices. The airline, however, reported $35.5 million in profits for its first quarter ending June. - Businessworld.
Friday, October 23, 2009
Thursday, October 8, 2009
PAL loses P3-b labor case
Manila Standard
Oct. 7, 2009
THE Supreme Court has ordered the labor arbiter to compute the compensation due some 1,400 cabin crew that Philippine Airlines retrenched in 1998 after the flag carrier was placed under corporate rehabilitation.
The high court’s order came after it affirmed its decision in July 2008 declaring as illegal PAL’s dismissal of the cabin crew, and then tossed back the case to the labor arbiter so it could compute exactly how much the carrier owed them.
Initial estimates showed that Philippine Airlines owed the employees P3 billion, Daniel Reyes, the airline union’s lawyer, said earlier.
The Court said that the flight attendants who had reached retirement age or had died should receive back wages up to the date of their retirement.
Those who had not been re-employed by the carrier—including those who had executed quitclaims and received separation pay or financial assistance—should be reinstated without loss of seniority rights and paid full back wages. But the amounts they had already received should be deducted from whatever amounts were adjudged to them individually, the high court said.
It said the flight attendants who had obtained substantially equivalent or even more lucrative employment elsewhere in 1998 or after were deemed to have severed their employment with the carrier.
“They shall be entitled to full back wages from the date of their retrenchment only up to the date they found employment elsewhere,” the Court said.
PAL president Jaime Bautista said he was disappointed with the high court’s decision.
“While we have yet to receive a copy of the said decision, PAL is disappointed that the high tribunal did not appreciate our arguments that the termination of PAL employees, including [Flight Attendants and Stewards Association of the Philippines] members in 1998, was necessitated by the fact that PAL was under rehabilitation, which is equivalent to Chapter 11 bankruptcy,” Bautista said in a statement.
“We will wait for the official copy of the Supreme Court decision to study its implication and determine our legal options,” he said.
Bautista last month told the Philippine Airlines Employees Association that management planned to outsource or spin off some units including catering, passenger handling, ramp handling and cargo handling because of heavy losses.
In response, the association said this planned “second wave of outsourcing” would affect the job security of the 2,000 to 4,000 employees assigned to those departments.
“It seems 10 years of labor sacrifice were not enough,” group president Gerry Rivera said. Rey E. Requejo
Oct. 7, 2009
THE Supreme Court has ordered the labor arbiter to compute the compensation due some 1,400 cabin crew that Philippine Airlines retrenched in 1998 after the flag carrier was placed under corporate rehabilitation.
The high court’s order came after it affirmed its decision in July 2008 declaring as illegal PAL’s dismissal of the cabin crew, and then tossed back the case to the labor arbiter so it could compute exactly how much the carrier owed them.
Initial estimates showed that Philippine Airlines owed the employees P3 billion, Daniel Reyes, the airline union’s lawyer, said earlier.
The Court said that the flight attendants who had reached retirement age or had died should receive back wages up to the date of their retirement.
Those who had not been re-employed by the carrier—including those who had executed quitclaims and received separation pay or financial assistance—should be reinstated without loss of seniority rights and paid full back wages. But the amounts they had already received should be deducted from whatever amounts were adjudged to them individually, the high court said.
It said the flight attendants who had obtained substantially equivalent or even more lucrative employment elsewhere in 1998 or after were deemed to have severed their employment with the carrier.
“They shall be entitled to full back wages from the date of their retrenchment only up to the date they found employment elsewhere,” the Court said.
PAL president Jaime Bautista said he was disappointed with the high court’s decision.
“While we have yet to receive a copy of the said decision, PAL is disappointed that the high tribunal did not appreciate our arguments that the termination of PAL employees, including [Flight Attendants and Stewards Association of the Philippines] members in 1998, was necessitated by the fact that PAL was under rehabilitation, which is equivalent to Chapter 11 bankruptcy,” Bautista said in a statement.
“We will wait for the official copy of the Supreme Court decision to study its implication and determine our legal options,” he said.
Bautista last month told the Philippine Airlines Employees Association that management planned to outsource or spin off some units including catering, passenger handling, ramp handling and cargo handling because of heavy losses.
In response, the association said this planned “second wave of outsourcing” would affect the job security of the 2,000 to 4,000 employees assigned to those departments.
“It seems 10 years of labor sacrifice were not enough,” group president Gerry Rivera said. Rey E. Requejo
Wednesday, October 7, 2009
SC affirms ruling on PAL dismissal of cabin crew
Abs-cbn news
10/06/2009 9:00 PM
MANILA - The Supreme Court has affirmed with finality its July 22,2008 ruling that the dismissal of some 1,400 cabin crew personnel of local carrier Philippine Airlines (PAL) was illegal.
In a 31-page resolution penned by Associate Justice Consuelo Ynares-Santiago, the Court’s Special Third Division denied for lack of merit the motion for reconsideration filed by PAL seeking the reversal of the ruling.
The High Tribunal held that the Lucio Tan-led airline’s reduction of personnel was illegal as it failed to comply with certain standards established under the law.
The Court dismissed PAL's claim that the pilots’ strike on June 5, 1998 caused the company to bleed financially, thus justifying the retrenchment of the flight attendants belonging to the Flight Attendants and Stewards Association of the Philippines (FASAP).
“We find this argument untenable. The strike was a temporary occurrence that did not necessitate the immediate and sweeping retrenchment of 1,400 cabin or flight attendants,” the High Tribunal noted.
The Tribunal's 2008 decision has made PAL a landmark case that provided lessons to shaky companies that are considering retrenchment of its employees. It has also become a guide to labor unions and employees to detect forms of illegal dismissal. (Read: Retrenching workers? Don’t repeat PAL’s mistake)
Recently, PAL has offered early retirement packages to its employees until end-October as it plans to reduce its 8,000-strong workforce by at much as 10% this year.
At present, the company said manpower accounts for 18% of the company's total expenses.
Backwages, reinstatement
While affirming the core of its 2008 decision, the High Tribunal has reconsidered its previous order that PAL immediately reinstate the retrenched cabin crew, and pay their backwages and separation pay.
It said these are no longer feasible since a substantial fraction of the 1,400 flight attendants have already been recalled, reinstated, or relieved from the service while others have already reached the mandatory retirement age or even died. A good number of the retrenched employees have also received separation pay and signed quitclaim.
Previously, PAL's monetary award to the affected flight attendants would reach a whopping P2.3 billion.
Based on review of the case' records, the Supreme Court said that it will instead remanded the case to the labor arbiter “solely for the purpose of computing the exact amount of the award” to be given to the dismissed employees.
“After finality of this case, the records will have to be remanded to the labor arbiter who decided the case at the first instance. There the actual amount of PAL’s liability to each and every flight attendant will be computed. Both parties will have a chance to submit further proof and argument in support of their respective proposed computations,” the Court said.
The SC also reduced to P2 million the award of attorney’s fees and expenses of litigation. In its previous decision, the Court directed PAL to pay attorney’s fees equivalent to 10% of the total monetary award.
Pilots' strike
During the oral arguments on the case, the SC said PAL admitted that the principal and true reason it had to lay-off cabin personnel was not the downsizing of aircraft fleet size but the June 5, 1998 pilot’s strike, where around 600 of its pilots abandoned their planes and refused to fly.
As a result of this pilots’ strike, PAL said it suffered revenue losses equivalent to P100 million daily and P50 million of lost fixed costs.
The Court, however, held that there was no necessity for PAL to permanently implement its retrenchment scheme considering that the strike was only temporary.
It added that PAL could have implemented other cost cutting measures as temporary measure to defer the adverse effects of the pilots’ strike.
11 years after
After the 1998 retrenchement of the flight attendants, PAL is again reducing headcount to cut costs.
PAL is offering early retirement packages to its employees until end-October as it plans to reduce its 8,000-strong workforce by at much as 10% this year.
At present, the company said manpower accounts for 18% of the company's total expenses.
"We are currently reviewing our entire organizational set-up. We want to make PAL lean and mean so it will be agile and flexible enough to adapt to the new economic climate," PAL Holdings President Jaime Bautista previously told reporters during its recent annual stockholders meeting.
"We now have lower capacity, so we need to reduce manpower," Bautista explained.
Aside from reducing its workforce, Bautista confirmed that PAL will outsource its non-core services to prevent the company from incurring further losses.
In a notice sent to the PAL union early this month, he said services to be initially outsourced on November include catering, passenger handling, ramp handling, and cargo-handling operations.
Due to the brunt of the economic crisis on the global airline industry, PAL Holdings Inc. reported a total comprehensive loss of P12.26 billion for fiscal year ending March 31, 2009.
These losses are the holding firm's second in a row after losing P528.54 million in the previous year.
PAL has also reported a 12% drop in total revenues from April to June, its first quarter for fiscal year 2009.
Early this month, the International Air Transport Association (IATA) said the global airline industry is likely to lose $11 billion this year due to the economic crisis, higher than its previous forecast of a $9-billion loss. IATA said this would be driven mainly by lower passenger and cargo traffic this year, which the group expects to drop by 4% and 14%, respectively.
10/06/2009 9:00 PM
MANILA - The Supreme Court has affirmed with finality its July 22,2008 ruling that the dismissal of some 1,400 cabin crew personnel of local carrier Philippine Airlines (PAL) was illegal.
In a 31-page resolution penned by Associate Justice Consuelo Ynares-Santiago, the Court’s Special Third Division denied for lack of merit the motion for reconsideration filed by PAL seeking the reversal of the ruling.
The High Tribunal held that the Lucio Tan-led airline’s reduction of personnel was illegal as it failed to comply with certain standards established under the law.
The Court dismissed PAL's claim that the pilots’ strike on June 5, 1998 caused the company to bleed financially, thus justifying the retrenchment of the flight attendants belonging to the Flight Attendants and Stewards Association of the Philippines (FASAP).
“We find this argument untenable. The strike was a temporary occurrence that did not necessitate the immediate and sweeping retrenchment of 1,400 cabin or flight attendants,” the High Tribunal noted.
The Tribunal's 2008 decision has made PAL a landmark case that provided lessons to shaky companies that are considering retrenchment of its employees. It has also become a guide to labor unions and employees to detect forms of illegal dismissal. (Read: Retrenching workers? Don’t repeat PAL’s mistake)
Recently, PAL has offered early retirement packages to its employees until end-October as it plans to reduce its 8,000-strong workforce by at much as 10% this year.
At present, the company said manpower accounts for 18% of the company's total expenses.
Backwages, reinstatement
While affirming the core of its 2008 decision, the High Tribunal has reconsidered its previous order that PAL immediately reinstate the retrenched cabin crew, and pay their backwages and separation pay.
It said these are no longer feasible since a substantial fraction of the 1,400 flight attendants have already been recalled, reinstated, or relieved from the service while others have already reached the mandatory retirement age or even died. A good number of the retrenched employees have also received separation pay and signed quitclaim.
Previously, PAL's monetary award to the affected flight attendants would reach a whopping P2.3 billion.
Based on review of the case' records, the Supreme Court said that it will instead remanded the case to the labor arbiter “solely for the purpose of computing the exact amount of the award” to be given to the dismissed employees.
“After finality of this case, the records will have to be remanded to the labor arbiter who decided the case at the first instance. There the actual amount of PAL’s liability to each and every flight attendant will be computed. Both parties will have a chance to submit further proof and argument in support of their respective proposed computations,” the Court said.
The SC also reduced to P2 million the award of attorney’s fees and expenses of litigation. In its previous decision, the Court directed PAL to pay attorney’s fees equivalent to 10% of the total monetary award.
Pilots' strike
During the oral arguments on the case, the SC said PAL admitted that the principal and true reason it had to lay-off cabin personnel was not the downsizing of aircraft fleet size but the June 5, 1998 pilot’s strike, where around 600 of its pilots abandoned their planes and refused to fly.
As a result of this pilots’ strike, PAL said it suffered revenue losses equivalent to P100 million daily and P50 million of lost fixed costs.
The Court, however, held that there was no necessity for PAL to permanently implement its retrenchment scheme considering that the strike was only temporary.
It added that PAL could have implemented other cost cutting measures as temporary measure to defer the adverse effects of the pilots’ strike.
11 years after
After the 1998 retrenchement of the flight attendants, PAL is again reducing headcount to cut costs.
PAL is offering early retirement packages to its employees until end-October as it plans to reduce its 8,000-strong workforce by at much as 10% this year.
At present, the company said manpower accounts for 18% of the company's total expenses.
"We are currently reviewing our entire organizational set-up. We want to make PAL lean and mean so it will be agile and flexible enough to adapt to the new economic climate," PAL Holdings President Jaime Bautista previously told reporters during its recent annual stockholders meeting.
"We now have lower capacity, so we need to reduce manpower," Bautista explained.
Aside from reducing its workforce, Bautista confirmed that PAL will outsource its non-core services to prevent the company from incurring further losses.
In a notice sent to the PAL union early this month, he said services to be initially outsourced on November include catering, passenger handling, ramp handling, and cargo-handling operations.
Due to the brunt of the economic crisis on the global airline industry, PAL Holdings Inc. reported a total comprehensive loss of P12.26 billion for fiscal year ending March 31, 2009.
These losses are the holding firm's second in a row after losing P528.54 million in the previous year.
PAL has also reported a 12% drop in total revenues from April to June, its first quarter for fiscal year 2009.
Early this month, the International Air Transport Association (IATA) said the global airline industry is likely to lose $11 billion this year due to the economic crisis, higher than its previous forecast of a $9-billion loss. IATA said this would be driven mainly by lower passenger and cargo traffic this year, which the group expects to drop by 4% and 14%, respectively.
Monday, October 5, 2009
PAL slashes all its domestic fares
(The Freeman) Updated October 04, 2009 12:00 AM
CEBU, Philippines - Philippine Air Lines is slashing all its domestic fares by P400 as additional financial assistance in the wake of massive devastation wrought by tropical storm Ondoy over the weekend.
Dubbed as BIYAHEnihan, according to Jonathan Gesmundo of the PAL, the P400 fare reduction is applicable on one-way tickets to any domestic destination of PAL and PAL Express.
“This is a way of assisting typhoon victims and their relatives to fly to Manila or to the province to enable them to be with their families,” Gesmundo said in a press release sent to The FREEMAN.
Gesmundo said the tickets may be bought through the PAL or PAL Express websites and or ticket offices or any accredited travel agents before October 8.
The travel must be completed by October 31.
Earlier, PAL offered to airlift for free selected donations from the provinces for the typhoon victims addressed to any reputable, non-profit charitable organization in Manila. — Garry B. Lao/BRP (FREEMAN NEWS)
CEBU, Philippines - Philippine Air Lines is slashing all its domestic fares by P400 as additional financial assistance in the wake of massive devastation wrought by tropical storm Ondoy over the weekend.
Dubbed as BIYAHEnihan, according to Jonathan Gesmundo of the PAL, the P400 fare reduction is applicable on one-way tickets to any domestic destination of PAL and PAL Express.
“This is a way of assisting typhoon victims and their relatives to fly to Manila or to the province to enable them to be with their families,” Gesmundo said in a press release sent to The FREEMAN.
Gesmundo said the tickets may be bought through the PAL or PAL Express websites and or ticket offices or any accredited travel agents before October 8.
The travel must be completed by October 31.
Earlier, PAL offered to airlift for free selected donations from the provinces for the typhoon victims addressed to any reputable, non-profit charitable organization in Manila. — Garry B. Lao/BRP (FREEMAN NEWS)
Thursday, October 1, 2009
PAL hit hard by slowdown in international traffic
By Mary Ann LL. Reyes (The Philippine Star)
Updated October 01, 2009 12:00 AM
MANILA, Philippines - Philippine Airlines (PAL) is expected to suffer a loss for its fiscal year ending March 31, 2010 mainly due to a slowdown in international traffic that has affected not only local airlines but the entire world aviation industry as well.
At the sidelines of yesterday’s stockholders’ meeting of PAL parent PAL Holdings Inc., PAL president and CEO Jaime Bautista said that while they posted earnings during the first quarter of the current fiscal year (April to June), the second quarter covering the July to September 2009 period is expected to be a loss while the third and fourth quarters of the 2009-2010 fiscal year may be break even. With PAL accounting for almost 100 percent of PAL Holdings’ revenues, the financial picture of the two companies are almost the same.
Last fiscal year, PAL registered a $301- million loss, largely due to increased fuel cost and the economic slowdown. “This year, we expect the loss to be much lower than last year’s,” Bautista said.
Asked to describe the third quarter (July to September 2009) situation, PAL’s chief executive noted that traffic is still down considering the effects of the worldwide recession.
But while PAL’s international passenger traffic is down, its domestic passenger volume has increased. “Domestic traffic has not been very much affected and this we attribute to the efforts of the Tourism department to improve tourist arrivals to the country,” he pointed out. The international business accounts for about 70 percent of total revenues for PAL.
He said that while revenues are expected to be down for the current fiscal year and the company is projected to realize a loss, passenger traffic for the combined international and domestic businesses is expected to slightly increase from last year’s 8.95 million passengers to around nine million.
Bautista, who is also the president of PAL Holdings, however pointed out that the projected nine million passengers flown for the current fiscal year is still lower than expectations.
So far, PAL has reduced capacity by seven percent following expectations that the market will be down by about 10 percent.
And because of the reduction in capacity, Bautista said there is a need to reduce manpower. PAL has asked its employees’ unions to avail of the early retirement, after which rationalization of manpower will follow. “We are looking at a seven to 10 percent cutback in manpower,” he revealed.
Bautista told stockholders that the past fiscal year covering April 1, 2009 to March 31, 2009 has been a difficult year for the airline industry in general, mainly due to increased fuel cost and falling passenger demand.
He noted that there was a 38-percent increase in average fuel prices, from $89 in 2008 to $123 in 2009, coupled with higher fuel consumption and the depreciation of the peso against the dollar.
As a result, the company posted a P12.26 billion loss for the last fiscal year, an increase from the P528.5 million loss in the previous year.
Bautista said they expect the market to remain depressed in the months ahead and the situation to be extremely challenging.
“We are now on the second quarter of an extremely difficult fiscal year which is showing no signs of recovery. And so far, the April to June results have not been encouraging,” he stressed.
In order to boost the company’s financial condition, Bautista revealed that they are tapping new traffic streams, reducing flight frequencies in low-performing areas, redeploying capacity, deferring non-essential capital expenditure, and trimming route network and capacity in response to the changing demand condition.
“Our company will be severely tested by the current downturn. But we are working to succeed and return to profitability,” he said.
Meanwhile, PAL Holdings said it fully supports the cost-cutting measures being pursued by PAL to survive the crisis that continues to plague airlines worldwide.
Bautista also revealed that they are eyeing new destinations either through charters or regular scheduled operations. PAL is also expecting to take delivery of its brand new and fuel-efficient Boeing 77-300ERs and is in the final stages of its $50-million program of refurbishing the current fleet of B744s.
Updated October 01, 2009 12:00 AM
MANILA, Philippines - Philippine Airlines (PAL) is expected to suffer a loss for its fiscal year ending March 31, 2010 mainly due to a slowdown in international traffic that has affected not only local airlines but the entire world aviation industry as well.
At the sidelines of yesterday’s stockholders’ meeting of PAL parent PAL Holdings Inc., PAL president and CEO Jaime Bautista said that while they posted earnings during the first quarter of the current fiscal year (April to June), the second quarter covering the July to September 2009 period is expected to be a loss while the third and fourth quarters of the 2009-2010 fiscal year may be break even. With PAL accounting for almost 100 percent of PAL Holdings’ revenues, the financial picture of the two companies are almost the same.
Last fiscal year, PAL registered a $301- million loss, largely due to increased fuel cost and the economic slowdown. “This year, we expect the loss to be much lower than last year’s,” Bautista said.
Asked to describe the third quarter (July to September 2009) situation, PAL’s chief executive noted that traffic is still down considering the effects of the worldwide recession.
But while PAL’s international passenger traffic is down, its domestic passenger volume has increased. “Domestic traffic has not been very much affected and this we attribute to the efforts of the Tourism department to improve tourist arrivals to the country,” he pointed out. The international business accounts for about 70 percent of total revenues for PAL.
He said that while revenues are expected to be down for the current fiscal year and the company is projected to realize a loss, passenger traffic for the combined international and domestic businesses is expected to slightly increase from last year’s 8.95 million passengers to around nine million.
Bautista, who is also the president of PAL Holdings, however pointed out that the projected nine million passengers flown for the current fiscal year is still lower than expectations.
So far, PAL has reduced capacity by seven percent following expectations that the market will be down by about 10 percent.
And because of the reduction in capacity, Bautista said there is a need to reduce manpower. PAL has asked its employees’ unions to avail of the early retirement, after which rationalization of manpower will follow. “We are looking at a seven to 10 percent cutback in manpower,” he revealed.
Bautista told stockholders that the past fiscal year covering April 1, 2009 to March 31, 2009 has been a difficult year for the airline industry in general, mainly due to increased fuel cost and falling passenger demand.
He noted that there was a 38-percent increase in average fuel prices, from $89 in 2008 to $123 in 2009, coupled with higher fuel consumption and the depreciation of the peso against the dollar.
As a result, the company posted a P12.26 billion loss for the last fiscal year, an increase from the P528.5 million loss in the previous year.
Bautista said they expect the market to remain depressed in the months ahead and the situation to be extremely challenging.
“We are now on the second quarter of an extremely difficult fiscal year which is showing no signs of recovery. And so far, the April to June results have not been encouraging,” he stressed.
In order to boost the company’s financial condition, Bautista revealed that they are tapping new traffic streams, reducing flight frequencies in low-performing areas, redeploying capacity, deferring non-essential capital expenditure, and trimming route network and capacity in response to the changing demand condition.
“Our company will be severely tested by the current downturn. But we are working to succeed and return to profitability,” he said.
Meanwhile, PAL Holdings said it fully supports the cost-cutting measures being pursued by PAL to survive the crisis that continues to plague airlines worldwide.
Bautista also revealed that they are eyeing new destinations either through charters or regular scheduled operations. PAL is also expecting to take delivery of its brand new and fuel-efficient Boeing 77-300ERs and is in the final stages of its $50-million program of refurbishing the current fleet of B744s.
PAL hit hard by slowdown in international traffic
By Mary Ann LL. Reyes (The Philippine Star)
Updated October 01, 2009 12:00 AM
MANILA, Philippines - Philippine Airlines (PAL) is expected to suffer a loss for its fiscal year ending March 31, 2010 mainly due to a slowdown in international traffic that has affected not only local airlines but the entire world aviation industry as well.
At the sidelines of yesterday’s stockholders’ meeting of PAL parent PAL Holdings Inc., PAL president and CEO Jaime Bautista said that while they posted earnings during the first quarter of the current fiscal year (April to June), the second quarter covering the July to September 2009 period is expected to be a loss while the third and fourth quarters of the 2009-2010 fiscal year may be break even. With PAL accounting for almost 100 percent of PAL Holdings’ revenues, the financial picture of the two companies are almost the same.
Last fiscal year, PAL registered a $301- million loss, largely due to increased fuel cost and the economic slowdown. “This year, we expect the loss to be much lower than last year’s,” Bautista said.
Asked to describe the third quarter (July to September 2009) situation, PAL’s chief executive noted that traffic is still down considering the effects of the worldwide recession.
But while PAL’s international passenger traffic is down, its domestic passenger volume has increased. “Domestic traffic has not been very much affected and this we attribute to the efforts of the Tourism department to improve tourist arrivals to the country,” he pointed out. The international business accounts for about 70 percent of total revenues for PAL.
He said that while revenues are expected to be down for the current fiscal year and the company is projected to realize a loss, passenger traffic for the combined international and domestic businesses is expected to slightly increase from last year’s 8.95 million passengers to around nine million.
Bautista, who is also the president of PAL Holdings, however pointed out that the projected nine million passengers flown for the current fiscal year is still lower than expectations.
So far, PAL has reduced capacity by seven percent following expectations that the market will be down by about 10 percent.
And because of the reduction in capacity, Bautista said there is a need to reduce manpower. PAL has asked its employees’ unions to avail of the early retirement, after which rationalization of manpower will follow. “We are looking at a seven to 10 percent cutback in manpower,” he revealed.
Bautista told stockholders that the past fiscal year covering April 1, 2009 to March 31, 2009 has been a difficult year for the airline industry in general, mainly due to increased fuel cost and falling passenger demand.
He noted that there was a 38-percent increase in average fuel prices, from $89 in 2008 to $123 in 2009, coupled with higher fuel consumption and the depreciation of the peso against the dollar.
As a result, the company posted a P12.26 billion loss for the last fiscal year, an increase from the P528.5 million loss in the previous year.
Bautista said they expect the market to remain depressed in the months ahead and the situation to be extremely challenging.
“We are now on the second quarter of an extremely difficult fiscal year which is showing no signs of recovery. And so far, the April to June results have not been encouraging,” he stressed.
In order to boost the company’s financial condition, Bautista revealed that they are tapping new traffic streams, reducing flight frequencies in low-performing areas, redeploying capacity, deferring non-essential capital expenditure, and trimming route network and capacity in response to the changing demand condition.
“Our company will be severely tested by the current downturn. But we are working to succeed and return to profitability,” he said.
Meanwhile, PAL Holdings said it fully supports the cost-cutting measures being pursued by PAL to survive the crisis that continues to plague airlines worldwide.
Bautista also revealed that they are eyeing new destinations either through charters or regular scheduled operations. PAL is also expecting to take delivery of its brand new and fuel-efficient Boeing 77-300ERs and is in the final stages of its $50-million program of refurbishing the current fleet of B744s.
Updated October 01, 2009 12:00 AM
MANILA, Philippines - Philippine Airlines (PAL) is expected to suffer a loss for its fiscal year ending March 31, 2010 mainly due to a slowdown in international traffic that has affected not only local airlines but the entire world aviation industry as well.
At the sidelines of yesterday’s stockholders’ meeting of PAL parent PAL Holdings Inc., PAL president and CEO Jaime Bautista said that while they posted earnings during the first quarter of the current fiscal year (April to June), the second quarter covering the July to September 2009 period is expected to be a loss while the third and fourth quarters of the 2009-2010 fiscal year may be break even. With PAL accounting for almost 100 percent of PAL Holdings’ revenues, the financial picture of the two companies are almost the same.
Last fiscal year, PAL registered a $301- million loss, largely due to increased fuel cost and the economic slowdown. “This year, we expect the loss to be much lower than last year’s,” Bautista said.
Asked to describe the third quarter (July to September 2009) situation, PAL’s chief executive noted that traffic is still down considering the effects of the worldwide recession.
But while PAL’s international passenger traffic is down, its domestic passenger volume has increased. “Domestic traffic has not been very much affected and this we attribute to the efforts of the Tourism department to improve tourist arrivals to the country,” he pointed out. The international business accounts for about 70 percent of total revenues for PAL.
He said that while revenues are expected to be down for the current fiscal year and the company is projected to realize a loss, passenger traffic for the combined international and domestic businesses is expected to slightly increase from last year’s 8.95 million passengers to around nine million.
Bautista, who is also the president of PAL Holdings, however pointed out that the projected nine million passengers flown for the current fiscal year is still lower than expectations.
So far, PAL has reduced capacity by seven percent following expectations that the market will be down by about 10 percent.
And because of the reduction in capacity, Bautista said there is a need to reduce manpower. PAL has asked its employees’ unions to avail of the early retirement, after which rationalization of manpower will follow. “We are looking at a seven to 10 percent cutback in manpower,” he revealed.
Bautista told stockholders that the past fiscal year covering April 1, 2009 to March 31, 2009 has been a difficult year for the airline industry in general, mainly due to increased fuel cost and falling passenger demand.
He noted that there was a 38-percent increase in average fuel prices, from $89 in 2008 to $123 in 2009, coupled with higher fuel consumption and the depreciation of the peso against the dollar.
As a result, the company posted a P12.26 billion loss for the last fiscal year, an increase from the P528.5 million loss in the previous year.
Bautista said they expect the market to remain depressed in the months ahead and the situation to be extremely challenging.
“We are now on the second quarter of an extremely difficult fiscal year which is showing no signs of recovery. And so far, the April to June results have not been encouraging,” he stressed.
In order to boost the company’s financial condition, Bautista revealed that they are tapping new traffic streams, reducing flight frequencies in low-performing areas, redeploying capacity, deferring non-essential capital expenditure, and trimming route network and capacity in response to the changing demand condition.
“Our company will be severely tested by the current downturn. But we are working to succeed and return to profitability,” he said.
Meanwhile, PAL Holdings said it fully supports the cost-cutting measures being pursued by PAL to survive the crisis that continues to plague airlines worldwide.
Bautista also revealed that they are eyeing new destinations either through charters or regular scheduled operations. PAL is also expecting to take delivery of its brand new and fuel-efficient Boeing 77-300ERs and is in the final stages of its $50-million program of refurbishing the current fleet of B744s.
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