PAL welcomes Palace ruling on spin-off plan

Flag carrier Philippine Airlines welcomed Malacañang’s ruling upholding its right to restructure its operations by spinning-off its Airport Services, In-flight Catering and Call Center Reservations units. The Office of the President upheld a Labor Department ruling recognizing PAL’s right to spin-off three non-core businesses. “PAL can now focus on its restructuring efforts in order to survive in the long term," PAL president Jaime Bautista said in a news release posted on PAL's website. He added this removes all legal impediments on the implementation of the spin-off program. PAL said it will abide by the Palace order, including a calling for an additional P50,000 gratuity pay for each affected worker. Bautista said PAL management will now reach out to affected workers to discuss the smooth and orderly implementation of the ruling. He urged members of the PAL Employees Association (PALEA) to respect and abide by the decision for the sake of industrial peace and the welfare of the flying public. Bautista expressed gratitude to President Benigno Aquino III and Executive Secretary Paquito Ochoa Jr. for “recognizing the difficulties experienced by PAL which necessitated the spin-off its three units." The more than 4,000 PAL employees that will remain with the airline are equally grateful because they know that the spin-off is necessary for the airline’s continued survival, he added. “Our hearts go out to the employees who will be affected by the restructuring move," Bautista stressed. Bautista assured affected workers of the following benefits:

* Separation pay equivalent to 1.25 month’s salary for every year of service; * Gratuity of P100,000 per affected employee (a P50,000 increase per the latest Malacanang order); * One-hundred percent (100%) commutation to cash of unused vacation leave and sick leave balances; * One-year extension of the medical and hospitalization benefits; and * Trip pass benefits depending on the number of years of service.

President Aquino formally assumed jurisdiction over the labor-management dispute last December 15, averting a potential strike by PALEA, which filed a notice of strike on November 5, 2010. PALEA also filed a petition for presidential intervention before the Office of the President after Labor Secretary Rosalinda Baldoz ruled in October last year that management’s decision to spin-off of its three non-score units is “a valid exercise of management prerogative". The flag carrier maintains that it needs to outsource its three non-core units as part of cost-control strategies to ensure the airline’s long-term survival. Nearly 2,600 workers who will be part of the restructuring program will be assured of slots in the service provider, which will take over the operations of the three units to be spun off. Last Thursday, PALEA voted an "overwhelming" yes to stage a strike to compel the flag carrier's management to enter negotiations for a collective bargaining agreement. But earlier, PAL management had maintained it will only negotiate an agreement with PALEA after Malacañang, which has taken jurisdiction of the row, rules on its plan to outsource its non-core operations. Moreover, it said a strike vote has no basis. “How can the spin-off issue be discussed… when the case is still within the purview of the Palace?" the company said in a statement last Wednesday, citing its president, Jaime Bautista. [See story: PALEA shrugs off PAL comment on strike vote].