PAL willing to open books to prove losses

Flag-carrier Philippine Airlines (PAL) is “more than willing" to open its financial books and submit them to Congress for scrutiny to prove that it is losing money and needs to retrench 2,600 of its employees. “We are ready to submit, we have submitted today our audited financial statement for the last three years. We are more than willing to submit whatever documents the committee will require," Jaime Bautista, PAL’s president and chief executive officer, told reporters after a hearing at the House of Representatives. During the hearing by the House labor committee on the labor row between the PAL management and its employees, Surigao del Sur Rep. Philip Pichay asked the flag carrier to also submit its interim financial statement for January to September 2010 operations. “I want your financial statement, I want to know your cash flow," Pichay, a certified public accountant, said. Bautista said PAL suffered substantial losses in the past years. In fact, he said, PAL’s main competitor is now bigger than them in terms of domestic operations. “We lost P15 billion in the last two years. There were years that we gained money, there were years that we lost money. But there were more accumulated losses than profit," he said. He said this is the reason why they decided to reduce their capacity and outsource its services such as catering and airport services and call center reservations. Outsourcing The Philippine Airlines Employees Association (PALEA) said the flag carrier was just concealing its true financial position to terminate workers and resort to the more economical employment outsourcing. Bautista said PAL even has to borrow money for the separation pay of the 2,600 employees that will be retrenched due to the outsourcing. “We have to borrow. We have no cash to pay for it. We have talked to creditors and they are willing to lend us money," he said. He said the sale of the three non-core units was only done as a last resort after 14 major cost-cutting measures proved inadequate to guarantee PAL’s continued operations. He also insisted that PAL is not engaging in contractualization amid the hiring of third party service providers. When Bautista said the employees who will be affected by retrenchment can also be hired by the service providers “if they will pass the standards," the PAL employees present in the hearing laughed. “Mas mataas pa ang standard ng service provider kesa sa PAL (the service providers have higher standards than PAL)," the employees said. Not sister companies Bautista also said the service providers are not related with Lucio Tan, who owns PAL. Bautista, however, admitted it has been the practice of other airline companies to have a joint venture with the service providers. “It’s possible that airlines will have interest also in the service providers if you will look at the practices in the industry," he said. To check if indeed the owners of the service providers E-PLDT, Sky Kitchen and Sky Logistics are not related to Tan, Pichay asked the committee to subpoena them and attend the next hearing. Officials of the Department of Transportation and Communications will also be asked to be present in the hearing. Also during the hearing, Labor Secretary Rosalinda Baldoz said she sees nothing wrong with her decision to uphold the PAL management’s prerogative to restructure its organization, saying she remains convinced that it is “based on solid grounds." She also ruled that the termination of affected employees as a result of the spinoff is in accordance with law, and that PAL is not liable for any unfair labor practice as a result of said termination. Generous package The PAL management said it has provided a generous separation package for the affected workers, adding that it had also been affirmed by the Department of Labor and Employment. PALEA officials agreed that the separation package offered them was indeed generous but this can only tide them over for a few years. The PAL spinoff plan as approved by DOLE was estimated to cost the airline some P2.5-billion. The amount includes workers’ separation pay equivalent to 125 percent of their monthly salary for every year of service; a one-time cash gratuity of P50,000 per worker; vacation and sick leave credits will be paid in cash; free plane tickets depending on years of service; one year extension of hospitalization benefits; and employment with the third party service providers with guaranteed payment for one year of whatever salary is granted by their new employers. PALEA aired fears that allowing PAL to pursue the retrenchment program would hurt the labor sector and set a bad precedent on the constitutionally-guaranteed security of tenure of workers. PALEA is now planning to stage a strike if the issue will not be resolved. Bautista and Baldoz begged off from discussing in detail the issues related to alleged age and gender discrimination, maternity benefits and additional pay for PAL’s flight attendants, as the same are currently pending litigation before the DOLE and Commission on Human Rights. - KBK, GMANews.TV