Corporate News

Union strike grounds PAL; management hastens outsourcing

Posted on September 28, 2011

FLAG CARRIER Philippine Airlines (PAL) decided to let go of its ground crew earlier than planned and threatened to withhold separation pay after a shock strike halted operations yesterday.

STRANDED PASSENGERS queue at the Ninoy Aquino International Airport - Terminal 2 on Sept. 27. Philippine Airlines said it had cancelled its international and domestic flights after a shock walkout by its ground crew in protest at plans to outsource their 2,600 jobs next week. -- AFP

The airline said it cancelled its international and domestic flights after some 300 ground crew, including those in charge of check-in and catering, stopped working to protest an outsourcing plan that would lay off 2,600 employees.

Flights had not resumed by 6 p.m. as earlier promised as of press time and some passengers were instead taken on by affiliate Air Philippines.

“There is a possibility that [the striking workers] may not be getting their separation benefits after what happened,” Cielo A. Villaluna, PAL spokesperson, said in a telephone interview.

“Our lawyers are studying all legal options, including the filing of administrative, civil and criminal charges against the illegal strikers,” Jaime J. Bautista, PAL president and chief operating officer, said in a statement.

“They are risking their retirement pay and other benefits because of their illegal actions,” Mr. Bautista said.

The workers who were up for retrenchment by Oct. 1, the date when services would be turned over to contracted firms, were supposed to receive 100% cash payment of vacation and sick leave balance, one-year extension of medical coverage, and continued trip-pass benefits depending on the years of service rendered.

An additional gratuity of P100,000 was also included in the separation benefits.

Instead of keeping the ground crew on-duty until the end of the month, Ms. Villaluna said that the airline will implement its outsourcing plan three days ahead of schedule.

“The management has already declared all ground employees off-duty until Sept. 30 with pay,” Ms. Villaluna said.

Third-party service providers are being roped in to cut the airline’s annual ground servicing costs worth up to $15 million a year.

In a separate telephone interview yesterday, Alnem Varona Pretencio, Philippine Airlines Employees’ Association (PALEA) vice-president, reiterated the labor union’s plea for PAL to halt the implementation of the massive layoff.

“What we’re asking for is for management to stop the outsourcing plan.

We have already filed [a petition] before the Court of Appeals,” Mr. Pretencio said, referring to the group’s Aug. 26 petition.

The union had earlier argued that PAL should put on hold all outsourcing plans until the court makes a decision.

“We apologize profusely to the riding public, and sympathize with those who were affected just at the typhoon struck, but this is a bigger typhoon hitting our lives,” Gerardo F. Rivera, PALEA president, for his part said.

Some 14,000 passengers were reportedly stranded.

Asked to comment on the legality of the labor action, Mr. Pretencio said: “We are just conducting an action of protest, not a strike or rally.”

The disruption comes as PAL is already operating a reduced number of domestic and international flights until November as a temporary measure to ensure volumes remain manageable during the transition into outsourcing.

The carrier slashed flight frequencies by 30% for domestic routes and 12% for international routes.

The airline said it will be flying less often between Manila to Cebu, Davao, Bacolod, Iloilo, Butuan, Cotabato, Cagayan de Oro, Dipolog, Kalibo, Laoag, Legazpi, Tacloban, Tagbilaran and Zamboanga.

Meanwhile, affected international routes include those from Manila to Hong Kong, Bangkok, New Delhi, Macau, Singapore, Los Angeles, Vancouver, Guam, Sydney and Melbourne. PAL incurred a net loss of $10.6 million for the quarter ending in June from an income of $31.6 million in the same period last year, due to rising fuel costs and the global economic slowdown.

The airline is aiming for a “modest profit” for its 2011-2012 fiscal year ending in March, after raking in $72.5 million in the previous fiscal year.

Shares of listed PAL Holdings, Inc., fell by 6.6% to P5.55 apiece on Monday. -- Kathleen A. Martin with AFP