PAL to cut 2,300 jobs

MANILA, Philippines — Philippine Airlines (PAL) will cut 2,300 jobs in mid-March—the single-biggest manpower reduction in the local airline industry since the Covid-19 pandemic arrived in 2020, triggering the collapse of travel demand in the country and overseas.

Citing fewer flights and prevailing travel restrictions, the flag carrier said the cuts represented about 30 percent of its workforce and included both voluntary separation and retrenchment.

“This has been an extremely difficult and painful decision. For our colleagues who are leaving, rest assured that we are committed to support you through this transition,” PAL president Gilbert Santa Maria said in a statement on Tuesday.

“We extend to you our deepest gratitude for your years of hard work and dedicated service, and we will always cherish the ties you have established with the PAL family,” he added.

Owned by taipan Lucio Tan and Japan’s ANA Holdings as a minority shareholder, PAL is Asia’s oldest airline and the local carrier with the largest international network, which includes nonstop flights to the United States and Europe.

It suffered more severely than domestic competitors amid tra­vel bans and fears of a virus that was first detected in China and rapidly spread around the globe.

Financial losses at its pa­rent company, PAL Holdings, had ballooned to P28.85 billion as of September last year.

On Tuesday, PAL said operations remained at less than 30 percent of pre-pandemic weekly flights.

The latest workforce reduction, initially announced to employees in September 2020 but whose implementation was delayed, is part of a broader rehabilitation program to ensure PAL’s survival.

This includes the planned filing of Chapter 11 creditor protection proceedings in the Uni­ted States and the finalization of a $5 billion debt rehabilitation program, the Inquirer previously reported.

The program would be wider in scope than what PAL executed in the wake of the 1997 Asian financial crisis. It undertook other steps to control costs when the pandemic struck, such as the suspension of capital spending, management pay cuts, and the deferral of lease payments for aircraft.

Tan also infused P6 billion more into PAL Holdings during the first semester of 2020. The company, however, reported a multibillion-peso capital deficiency in its latest filing as of the third quarter last year.

Budget airline Cebu Pacific let go of nearly 1,200 employees, while AirAsia Philippines laid off about 260 workers last year.

The fallout has also spread to businesses that serve the airlines, such as baggage handling and in-flight meal catering.

1Aviation Groundhandling Services Corp., Cebu Paci­fic’s ground handling provider, slashed 1,400 jobs last year.

At the same time, Lufthansa Technik Philippines, which provides aircraft maintenance for carriers around the world, announced the delay of a capacity expansion project amid weak demand for air travel.

Lufthansa Technik is a venture between Lufthansa Technik and Tan’s MacroAsia Corp.

The Air Carriers Association of the Philippines has repeatedly pleaded to the Philippine government for financial aid, which it said could take the form of emergency loans and debt guarantees.

The government has yet to extend significant financial help to airlines.

The difficult situation for local airlines mirrors the woes of the aviation industry around the world. According to the International Air Transport Association (Iata), full recovery to pre-pandemic levels could take several more years.

Iata projected global industry losses to hit $38.7 billion this year. Last year, losses were estimated at $118.5 billion.

More widespread vaccination, however, could signal a turnaround for the industry.

On Tuesday, PAL said it would support the transportation of Covid-19 vaccines once these became available.

/MUF