PAL ordered to withdraw termination notices

By Vito Barcelo

May 1, 2010
Justify Full
The Labor Department on Friday ordered Philippine Airlines’ management to recall all the notice of terminations it issued to an estimated 3,500 workers last week, and following a mediation hearing presided by Undersecretary for Labor Relations Rosalinda Baldoz.

Airline officials led by president Jaime Bautista and unions officials headed by Gerardo Rivera agreed to meet again at the airline’s boardroom on May 5, before the next meeting with Baldoz on May 7, according to a copy of the minutes of the mediation hearing.

A Labor Department official said airline officials discussed the carrier’s latest financial statement—copies of it were later furnished the Philippine Airlines Employees Association—which prompted the Lucio Tan-owned airline to decide to outsource non-core services like reservation, ground handling and catering.

An airline official later confirmed that the catering service had already been awarded to SkyKitchen Philippines, and not LSG Sky Chefs as earlier reported.

Leed by Cebu-based businessman Manuel Osmeña, SkyKitchen Philippines provides in-flight meals for Cathay Pacific, Qatar and Cebu Pacific.

Philippine Airlines said it expected to save about $1 billion a year in operating costs after it shall have spun off the catering and two other non-core services.

The airline on March 16 signed an agreement with ePLDT Ventus that authorized it to start taking reservation and other calls from the airline’s customers.

But after the Labor Department assumed jurisdiction over the outsourcing dispute, Labor Secretary Marianito Roque ordered both the labor union and the airline’s management to maintain the status quo and to “refrain from committing any act that might exacerbate the situation.”

As a result of the order, the airline assured the Commission on Elections of an uninterrupted transporting of passengers, cargo, ballots and other election materials leading to the May 10 elections.

“PAL’s scheduled spin-off and restructuring programs are on hold while the PALEA cannot engage in any mass action, work slowdown, stoppage or go on strike without violating the order of the Department of Labor and Employment,” the airline said in a statement.


  1. am i reading all this correctly that the root issue was outsourcing to companies that didnt profit certain inluential business persons on the local scene, but instead were assumed to be going to foreign interests or small-fry local groups? isnt that a load of irony, the country poo-poos other countries for retiring outsourcing from the Phils to cheaper locations abroad, even to the point of calling them racist.......... but does the exact opposite in their own backyard?

    One can only wonder how many 'ghost' employees are on those payrolls. Relaives of industry leaders and political families that collect pay on a job they've never set foot in.

  2. The bone of contention boils down to bloated retirement benefits sealed according to industry standard which the airline cannot now afford. It's actually the same strategy employed by British Airways to dampen costs by renegotiating terms. Unfortunately, the workers union can't see that times has indeed changed. Its a new whole world order out there.

    The DOLE order is not a government intervention per se, but a legal requirement mandated by the labor law that requires compulsory mediation for labor disputes inimical to public interests. And airlines, being grantees of legislative franchises, fall on these categories.

    But the writing is already on the wall. The order is just a way of delaying the inevitable. Unless the government intends to increase its 5.7% stake in the airline which is very unlikely.