Union Officials Reject Offer of 20% of PAL

Philippine Daily Inquirer
Thursday, September 17, 1998
By Dona Pazzibugan

MAJORITY of Philippine Airlines' union officials rejected Tuesday night a compromise agreement offered by PAL Chair Lucio Tan to save the 57-year-old airline from closure.

In a resolution, 15 members of the 21-man executive board of the PAL Employees’ Association (Palea) nullified the previous decision of the board last Friday to accept Tan's offer.

Under his proposal, Tan would give employees 20-percent ownership of PAL and three seats on the 15-member board of directors.

He also offered to give each employee 60,000 shares of stock worth P300, 000 which can only be sold upon the employee's retirement.

In exchange, there would be no negotiations for a collective bargaining agreement for 10 years.

The offer calls for the union to own 20 percent of the airline and three seats in the board in exchange for the suspension of the collective bargaining agreement for 10 years.

The resolution was adopted during an "emergency meeting" of the executive board late Tuesday afternoon.

In a press statement, PAL said it deeply laments the decision by the Palea leadership "to reverse its earlier agreement to management's proposals aimed at ensuring the survival of PAL."

"The reversal is a big blow to the efforts of all those working to keep PAL afloat, including the government, stockholders, employees, creditors, suppliers and ordinary citizens," the statement said.

It added that the agreement stemmed from the commitment of both panics to create an atmosphere conducive to investor and creditor confidence, which is critical to the rehabilitation of the flag carrier.

"PAL’s potential investors had required that such an agreement be institutionalized as a guarantee of long-term industrial peace and harmony in PAL, without which the airline cannot hope to recover and become competitive again," it said. "Precisely, Palea's rejection of what it had already agreed upon is a cause of worry for PAL's creditors and prospective investors."

"Mr. Lucio Tan's sincere offer to share with PAL employees the opportunity to shape the future of the airline was made not so much for his own interest as it was to reassure investors/creditors," the statement said.

The agreement threatened to split the Palea leadership as several officials found the proposed 10-year suspension of CBA unacceptable.

The accord reportedly met strong opposition within the ranks of the 3,000-strong union representing PAL’s ground crew. Palea is one of three unions of PAL. The others are the pilots' and the flight attendants' unions.

Fourteen Palea officials led by president Alex Barrientos signed the accord with Tan last Friday.

Tan reportedly said he would close down PAL unless the employees agree to his offer.

The accord, however, still has to undergo ratification by union members. But the Palea executive board's resolution appeared to have pre-empted the scheduled ratification of the accord in the next few days.

PAL Vice President Manolo Aquino said Palea, the largest of the airline's three union, accused the management of "many things that are not true," but declined to elaborate.

The proposed accord had been described as a last-ditch move to prevent the closure of the 57-year-old airline.

Aquino, however, said no immediate decision to close the company has been reached and officials were to meet later yesterday on the matter.

Calls to union President Alex Barrientos were unanswered.

Some union members and leaders of other unions have accused Barrientos of selling out to Tan.

"The members said they were prepared to face the consequence of this action," Barrientos said in a television interview.

The airline lost P2.2 billion in the first three months of the fiscal year beginning April 1, mainly because of work stoppages.

A 22-day pilots' strike in June caused the heaviest damage, creating revenue losses of about P200 million a day, PAL says.

In the previous fiscal year, the carrier reported a loss of P8.08 billion.

PAL is seeking to restructure its debts and has obtained permission to suspend payments to domestic and international creditors amounting to $2.1 billion while it prepares a rehabilitation plan. The plan includes the disposal of most of the airline's planes, a sharp reduction of flights, and cutbacks in personnel. With an AP report