PAL proceeds with spinoff for long-term survival

MANILA, Philippines—National flag carrier Philippine Airlines (PAL) said its plan to cut 2,600 jobs by October 1 would go ahead as scheduled despite continued protests and threats of a possible strike by the company’s labor union.

PAL on Wednesday said that its restructuring was vital to the company’s long-term survival, adding that it had to streamline operations to compete with better funded foreign carriers.

The company issued the statement as the PAL Employees’ Association (Palea) staged mass actions at the Ninoy Aquino International Airport (NAIA) Terminal 2—a facility exclusive to PAL—to protest the airline’s outsourcing program.

“As far as PAL is concerned, affected workers have been served separation notices. It’s not for them to accept or reject,” PAL said in a statement.

Sept. 9 deadline

Palea staged the protests ahead of the September 9 deadline for affected workers to signify their willingness to be rehired by Sky Kitchen, Sky Logistics and SPi Global Holdings Inc., the three outsourcing companies tapped to handle the operations of PAL’s closed units.

Sky Kitchen and Sky Logistics are owned by Cebu-based businessman Manny Osmeña, while SPi Global is a unit of Philippine Long Distance Telephone Co. (PLDT).

The affected workers have the option to be rehired by the three companies, once they lose their jobs at PAL.

“That is not a deadline imposed by PAL, but by the service providers for them to have enough lead time to hire other workers (if PAL employees reject the employment offers),” PAL said.

Severance benefits

Whether or not they take jobs at the service providers, PAL said the job cuts would go ahead as planned.

PAL has allocated about P2.5 billion in severance benefits for workers of its in-flight catering, ground-handling and call-center reservations.

Based on the Oct. 29, 2010, Department of Labor order, which upheld the legality of PAL’s move, affected workers will receive a separation pay equivalent to 125 percent of their monthly salary for every year of service, a gratuity pay of P50,000, 100 percent conversion of unused vacation and sick leaves, trip pass, and other noncash benefits.

Malacañang also provided the affected workers an additional P50,000 gratuity pay.

“It’s not for the workers to accept or reject. The law simply requires that they be notified 30 days before their termination,” PAL said.

Seminars for employees

PAL said it would also hold financial management seminars for the affected employees this month to ensure that they spend their separation benefits wisely.

Palea has asked the Court of Appeals to stop the implementation of PAL’s outsourcing program.

The airline has maintained its position that the Palace ruling that upheld the legality of the job cuts was executory, pending judicial resolution.

Palea president Gerry Rivera said: “PAL employees who have been working for 10, 20 or 30 years will be downgraded to probationary status for six months and after which he or she can simply be terminated after training other younger workers at the service providers.”

The three service providers have offered the affected PAL employees a starting salary of about P11,000 a month for six days of work a week, a rate that PAL president Jaime Bautista earlier described as competitive and “within industry standards.”

Currently, Palea workers enjoy five-day workweek and are paid more.