PAL operations spin off to cost P2.5B, says CEO

(Updated 3:14 p.m.) The plan to spin off its non-core services — an effort to restructure and streamline operations — will cost Philippine Airlines P2.5 billion, the flag carrier said Wednesday. PAL president and CEO Jaime Bautista told reporters in a briefing that spinning off the airline’s in-flight catering, airport services, and call center reservations was originally estimated at P2 billion. But last week’s ruling of Labor Secretary Rosalinda Baldoz “upped the figure by more than P400 million due to enhanced separation benefits and other modifications in the financial and non-cash awards," Bautista said. In the Baldoz decision, the Department of Labor and Employment (DOLE) recognized PAL management’s prerogative to restructure its operations. “Given its recent losses and current financial position, PAL would be hard put to raise P2.5 billion but this is a bitter pill we have to swallow. PAL believes DOLE’s decision is ‘just, reasonable and humane,’" Bautista said. “Since it has the force and effect of a law, we must respect the ruling," he added. “By not contesting the DOLE secretary’s decision, especially the grant of additional benefits, PAL hopes to finally implement a long delayed corporate restructuring that aims to stabilize the airline’s finances and eventually lead to an expansion and improvement of services," he said. “The spin off means PAL will sell its in-flight catering, airport services, and call center reservations which will lead to the early retirement of affected rank-and-file workers. They will all receive their respective separation pay and benefits that are much more than what the Labor Code provides," he explained. While the increased benefits will bear heavily on the airline’s precarious financial position, PAL said in statement Wednesday "it will do its best to pay all affected employees the modified package approved by DOLE. Bautista urged leaders of PAL Employees' Association or PALEA to respect the DOLE decision and look at the bigger picture of the airline’s continued survival amid a difficult operating environment. “Secretary Baldoz, no less, assured PALEA there will be no jobs lost in the spin off. Aside from receiving their benefits, all affected workers have the option to apply for positions in the third party service providers if they so choose," Bautista said. “At the end of the day, PAL wants to be remembered not for the 2,600 jobs it lost, but the more than 4,000 it saved," Bautista added. “We deeply lament that PAL management decided to push through with the drastic spin-off measure, unmindful of how it will affect the lives of 3,000 workers and their families," Roberto Anduiza, president of the Flight Attendants and Stewards’ Association, said in a statement released Tuesday. “FASAP is one with PALEA in its struggle to protect the job security of all PAL employees," Anduiza added. PALEA earlier alleged that PAL had actually contracted out the jobs in non-core services. Bautista on Wednesday stressed that third party service providers like PLDT e-Ventus for call center reservations is owned by PLDT, while Sky Kitchen for catering and Sky Logistics for airport services are owned by Cebu-based businessman Manny Osmeña. “These service providers are not owned by PAL chairman Lucio Tan or any of his family members," he said. — VS, GMANews.TV