Storm at PAL

The wildcat strike at the Philippine Airlines staged at the height of Typhoon “Pedring” more than illustrated the agony of the national flag carrier as it seeks adjustment in a difficult transition that is not only its lot but likewise that of the global airline industry. Last Tuesday, about 300 PAL employees reported for work at Terminal 2 of the Ninoy Aquino International Airport (Naia) but at 7 a.m walked out of their jobs. The company was forced to cancel 172 domestic and international flights, affecting 14,000 passengers. More flights were canceled the following day even though PAL security, police and aviation security, and the Manila International Airport Authority (MIAA) were able to persuade striking Palea workers to yield control of PAL’s check-in terminals, cargo, catering and ramp areas. Aside from canceled flights, there were damaged or disabled pushback tractors, tow tugs and deck loaders, which had been “made inoperable” by the striking workers, a management spokesperson claimed. But the PAL Employees Association (Palea) denied the accusation, blaming the damage on “inexperienced contractual employees” who had replaced the strikers.

The strikes advanced by a few days the separation of some 2,600 employees from service, which was supposed to be on September 30. Last month, PAL sent out notices of termination to employees in its in-flight catering, call center reservations and airport service departments. This followed the affirmation earlier by the Office of the President of PAL’s plan to outsource some of its job requirements as a legal exercise of a “management prerogative” aimed at cutting costs. Palea has challenged in the Court of Appeals the outsourcing plan, calling it union-busting. The management denies this, saying affected employees had been given the termination notice so they could meet the Sept. 9 deadline for them 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. The deadline was set by the three companies so they could properly process the employees before they take over the affected PAL departments. But apparently only a few employees signified their willingness to join the outsourcing companies. The three service providers had offered the affected 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.” Palea workers enjoy a five-day workweek and are paid more.

It is easy to see how polarized the situation is, with PAL management determined to implement the spinoff to save the airline and bring it to the 21st century, and with the employees just as determined to protect their job security. PAL will spend about P2.5 billion on the severance package. Based on the Oct. 29, 2010 ruling of Labor Secretary Rosalinda Baldoz, PAL workers affected by the spinoff would receive the following: separation pay of 125 percent of their basic monthly salary for every year of service; P50,000 gratuity pay; 100 percent commutable-to-cash vacation and sick leaves; and trip pass (travel) benefits. The size of the layoff package should show PAL’s resolve to implement the retrenchment not only for medium-term gains but long-term operational viability. PAL said that the restructuring is vital to the company’s long-term survival, adding that it had to streamline operations to compete with better-funded foreign carriers.

The latest episode indicates the largely troubled transition of the national flag carrier since taipan Lucio Tan bought into PAL in the early 1990s and took over management in the late 1990s. Tan inherited a sprawling and battened PAL bureaucracy that would have been ruled a flight overweight and—in the era of rationalization, downscaling and globalization—would have necessitated the “jettisoning of many parts” so that the airline could take off and be given a fighting chance in a viciously competitive arena. To his credit, Tan managed to stabilize the company and lessened its fat, dealing firmly, for instance, with the pilots who struck 13 years ago when the airline was trying to rationalize the pilots’ salaries and benefits. Early this month, in fact, the Court of Appeals gave PAL the go-signal to proceed with its P730-million damage suit against the pilots who staged a labor strike that crippled the flag carrier’s operations about 13 years ago. But if only because legal justice should be given the chance to sort out the claims and counterclaims of PAL and Palea, PAL should stay the implementation of the spinoff, out of respect for the Court of Appeals. Justice should be given first clearance to take flight.