Traders cheer Palace move to back PAL plan

Business leaders on Friday cheered Malacañang’s decision to allow Philippine Airlines to outsource its non-core operations as part of efforts to restructure the struggling flag carrier.

Beyond helping the airline to compete better, the industry leaders said the decision of the Aquino administration sends a strong signal to both local and foreign businessmen that the country is an investor-friendly destination.

“The position of the Palace on the PAL [labor] case is definitely a positive move that will increase the confidence of investors in this country,” said Philippine Chamber of Commerce and Industries Inc. president Francis Chua.

But PCCI—the country’s largest business organization in terms of membership—pointed out that the company should compensate workers who would be affected by its restructuring.

“The more important consideration is that the displaced employees are properly compensated or alternate job opportunities be provided them,” Chua said.

PCCI’s position was echoed by the Employers Confederation of the Philippines (ECOP), which had long been pushing for more flexible labor policies in the face of increased competition from foreign industries.

“I think this will give business more confidence going forward that we can outsource our noncore activities,” ECOP chairman emeritus Donald Dee said.

Under the proposed restructuring scheme, PAL would spin off its in-flight catering, cargo handling and call center reservations businesses to be able to save an estimated P600 million in costs each year.

The move is expected to affect 2,600 personnel of the Lucio Tan-owned airline. But PAL president Jaime Bautista said that many of them would likely be reabsorbed by the spun off firms.

Earlier this year, the Department of Labor and Employment approved PAL’s restructuring plan, which the airline’s unions vehemently oppose, saying troubled businesses had the right to restructure as long as laid off personnel would be properly compensated.

Opposing DOLE’s decision, the Philippine Airlines Employees Association brought their appeal before the Office of the President, which affirmed the other day the labor department’s ruling.

On Friday, foreign businessmen also lauded the Palace decision.

“If PAL wants to stay in business and be competitive with budget carriers and new airlines, they have to spin off [their non-core businesses],” said American Chamber of Commerce of the Philippines executive director Robert Sears. “They should have this flexibility. At the same time, they should respect labor laws and rights of employees.”

European Chamber of Commerce of the Philippines vice president Henry Schumacher had the same sentiments.

“Companies and the government should be allowed to do what it takes to stay or become more competitive,” Schumacher said. “And it goes without saying that the human side of such decision has to be treated fairly.”

PAL’s restructuring plan received fresh impetus this week after it announced that it slipped back in the red with a net loss of $10.6 million in the first quarter of its current fiscal year. This marked a reversal from the $31.6 million in net income it recorded during the same period in 2010.