Philippine Airlines may cut jobs, reduce flights

Philippines Airlines (PAL) announced it may cut jobs and may mount fewer flights after posting multi-million dollar losses at the end of its fiscal year in March. “Decisive steps" will be taken to help PAL survive the crisis after the Lucio Tan-owned airline posted $301.4 million in losses as of end-March this year, the company said in a statement. These steps include cutting its workforce and realigning operations to match demand, the company added. Management will offer early retirement packages for its employees as a way of enhancing productivity and reducing costs, Jaime J. Bautista, PAL president and chief operating officer, said. The company is currently reviewing its entire organizational set-up to make the workforce “lean and mean," he added. PAL shares the same predicament with giant airlines whose operations were severely hit by the slowdown in passenger traffic. PAL, which claims to be Asia’s first airline, is also set to mount lesser flights to US, Canada, Japan, Hong Kong, and Australia. “Seven percent of the airline’s total capacity would be reduced effective this month until March 2010," Bautista said. However, flights to domestic destinations will be increased. The company is “eyeing new destinations either through charters or regular scheduled operations," Bautista said. Besides expecting the delivery of brand new and fuel-efficient Boeing 777-300ERs, the company is also in the final stages of refurbishing its current fleet of wide-bodied aircraft to feature a bi-class configuration, new seats, and state-of-the-art entertainment systems. In the meantime, PAL shareholders approved a quasi-reorganization plan, reducing the par value of PAL shares to P0.20 from P0.80 per share. It will also increase its authorized capital stock from P16 billion to P20 billion divided into 100 billion shares at P0.20 per share. During the period, PAL’s revenues rose to $1.634 billion, from $1.504 billion the previous year. Revenues rose because it transported more passengers after the company bought additional aircraft. However, the cost of operating more flights, which involved higher maintenance costs and compounded by record-high fuel prices, raised expenses to $1.9 billion from $1.539 billion the previous year. Fuel comprises 44 percent of PAL's operating expenses. When the global crisis led to a travel slump in the latter part of the year, PAL's passenger load factor fell to an average of 76.2 percent, three points lower than the previous year. PAL also reported paying $165.4 million in principal and interest to its creditors, bringing to $2.4 billion the total paid amount from March 1999 to March 2009. With the protracted recession, the International Air Transport Association said its member-airlines are bracing for $9 billion in total combined losses by the end of the current fiscal year. - GMANews.TV