Union Reversal Threatens Company’s Survival: PAL

The Business Daily
Thursday, September 17, 1998
By The Management Information Service Newspaper

Philippine Airlines (PAL) yesterday said the decision by the PAL Employees’ Association (Palea) to reverse its earlier agreement to management’s proposal was a huge setback to all efforts to keep the company afloat.

“Management deeply laments the decision of the Palea leadership,” PAL said. “This is a big blow to the efforts of government, stockholders, employees, creditors, suppliers, and ordinary citizens.”

The agreement between management and Palea’s leadership last Sept. 11, 1998 stemmed from the commitment of both parties to create an atmosphere conducive to investor and creditor confidence, which is critical to the rehabilitation of the flag carrier.

PAL’s potential investor 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.

Palea’s rejection of what it had already agreed upon is a cause of worry for PAL’s creditors and prospective investors, the company said.

“Management had exerted all efforts to keep labor fully informed of the airline’s dire financial situation. In fact, representatives of the three PAL unions attended a presentation of the airline’s rehabilitation plan last week,” PAL said.

The airline noted that PAL Chair 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 and creditors.”