Save PAL, Save Jobs

Retaining 5,000 is better than losing them all

By: Conrado R. Banal III
First published in PDI



September 29, 2011

Nobody wanted to call it a “wildcat strike,” that work stoppage last Tuesday done by ground workers of the country’s flag carrier, PAL, which left thousands of passengers stranded at the airport.

Restructuring PAL help save those 5,000 remaining jobs.

Our contacts in the labor sector did not term it as a “sit-down strike,” which—being illegal and all—is usually just a spontaneous protest action.

Technically, what happened at the Naia last Tuesday was neither a wildcat strike, a measure without any authorization from the union officials, nor a spontaneous protest.

Make no mistake, the action taken by PAL workers at the Naia was so well organized, it seemed to be premeditated.

According to our sources at the MIAA [Manila International Airport Authority], as a result of the “strike,” a number of ground equipment of PAL was even destroyed. In other places, such an action would have been termed as “sabotage.”

The equipment would still not work by the time MIAA had cleared the airport of the protesting PAL workers well into the night.

MIAA chief Jose Angel Honrado, who served as military spokesman during the cute administration of Gloriaetta, perhaps deserves a pat on the back. He went to the airport to talk to the protesting group. Supposedly, he told them to vacate the area, or he would be forced to take action within the confines of the law. Our contacts at the Naia took his words to mean that the former general would remove the protesters out of the airport, physically.

Under RA 9497, the law that created the CAAP, or the Civil Aviation Authority of the Philippines, those who cause disruption at the airports are liable criminally—meaning, they can go to jail. Thanks to threats of terrorism, airports are sensitive areas all over the world. In this country, the airports serve about 10 million OFWs. I am afraid that the government will not do anything. Again.

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Today, PAL has a work force of about 7,500 people. By world standards, it is just too big for an airline its size. And so PAL wants to trim down its work force by farming out its in-flight catering, call center and airport ground services. This would result in the removal of about 2,600 employees.

PAL was willing to set aside money for their severance pay of about P2.5 billion, including a “gratuity pay” of P50,000 for each of the workers.

As if to show us that we are actually a rich country, the Aquino (Part II) administration is also giving each of the workers P50,000, or a total of P130 million of our tax money. Just how many taxpayers the BIR will have to harass to raise that amount is hard to say.

Perhaps Malacañang wants to appease the PAL workers who are constantly getting favorable media coverage, and never mind that in other places, “gratuity pay” is known simply as “tip.”

It is just that, if you recall all the troubles at the Naia in the past, affecting thousands of passengers, the cause of the problems—i.e. the protesting PAL employees and pilots—have always been getting their way.

Last year, PAL cancelled several flights because some foreign airlines pirated PAL-trained pilots, who were under contract to remain with PAL for at least six years. Our leader Benigno Simeon (aka BS) did not lift a finger then, even in the name of public interest and to protect the rights of all the people using the airports.

In fact, from what I gathered, BS even convinced PAL management to delay the restructuring, which the company wanted to do as early the middle of 2010, and in this country, nobody could really say “no” to the president.

To our contacts in business, such stories were bad for the image of BS. They showed a certain weakness, sometimes called indecisiveness.

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For more than 10 years now, PAL wanted to follow what the airline industry has been doing worldwide: outsource certain services to save on costs.

PAL has been bleeding. Taipan Lucio Tan already injected $2 billion in cash into the airline. The investment is almost wiped out by now, after years of heavy losses.

PAL is, perhaps, the only airline in the world that still has in-house call center with its own employees. American firm US Airways has a call center in Makati City, run by another company. Another American firm, Hawaiian Airline, has its call center in Baguio City.

According to news reports, PAL expected to shave off as much as $15 million a year from its expenses with the farmed-out services.

Such an amount may help PAL reduce its losses, but I am afraid it would not be enough to put the company back to profitability. My info is that, in the first quarter of this year alone, PAL already lost P500 million.

PAL must do other things—refurbishing the fleet or doing more effective marketing campaigns. These also cost a lot of money. Thus, PAL needs fresh capital.

The problem is, nobody wants to invest in a losing proposition such as PAL, due mainly to its huge labor cost. Potential investors are well aware of its internal problems that have been causing PAL’s bleeding.

Look, the airline industry worldwide was able to recover this year, with the IATA [International Air Transport Association] expecting industry profits to hit about $7 billion, which means the industry could now expect to recover from the heavy losses.

In the Asia-Pacific region, where PAL belongs, airline profits are expected to hit $2.5 billion this year. The profitable airlines, of course, exclude PAL.

As I said, PAL has about 7,500 workers. The restructuring would retain at least 5,000 for now.

If those striking PAL workers would have their way, and PAL management and the Aquino (Part II) administration would give in to their demands, those 5,000 workers are also in danger of losing their jobs.

Without the restructuring, as the bleeding continues, PAL would eventually have to close down permanently. In other words, the restructuring that can save PAL will also help save those 5,000 jobs.