PAL, Credit Suisse sign $50-M financing deal to fund spin-off program

PAL said Thursday it has sealed a financing deal with Credit Suisse to partly fund the flag carrier's P2.5-billion spin-off/outsourcing program that is set to start next October. Jose Gabriel Olives, PAL chief finance officer, said Credit Suisse will lend the airline $50 million which will be used to pay for the transition benefits — including separation pay — of nearly 2,400 workers affected by the spin-off. “The agreement has been signed. All affected workers from PAL’s catering, ground handling and call center reservations units can rest assured that they will be paid in full by October 2011 as promised," PAL said in a statement, citing Olives. Apart from Credit Suisse, other PAL creditors fully support the airline’s spin-off and outsourcing program to restructure and make the airline leaner and more competitive in the long run, Olives said. PAL’s local and international creditor banks know and recognize the program as a global industry trend, especially among airlines, he added. As this developed, the Philippine Airlines Employees Association (PALEA) asked the Department of Labor and Employment (DOLE) to invalidate the termination notices PAL management served the affected workers. The association alleged that the three third-party service providers contracted by PAL for the outsourcing plan, namely Sky Kitchen Phils. Inc., Sky Logistics Phils. Inc. and SPI Global Holdings, are “bogus" contractors. PALEA president Gerry Rivera said the service providers are not registered as a contractor or subcontractor under the DOLE Department Order 18 series of 2002. Not registered with DOLE As such, “…The outsourcing plan should be immediately suspended and the notices of termination issued by PAL should be voided too, given that the service providers are illegal labor-only contractors," Renato Magtubo, Partido ng Manggagawa national chairman said. In a press conference, Magtubo showed the media a certification signed by DOLE regional director Raymundo Agravante on September 7, 2011 which showed that Sky Kitchen, Sky Logistics, and SPI Global were not registered with the DOLE as contractors and subcontractors. Section 11 of the Department Order 18-02 (Registration of Contractors and Subcontractors), states that the “Failure to register shall give rise to the presumption that the contractor is engaged in labor-only contracting." Despite the opposition from the labor sector, Olives stressed that PAL will proceed with the spin-off in conjunction with the outsourcing as scheduled. Should the Court of Appeals decide the stop the program by issuing a temporary restraining order, PAL would have no choice but to heed the court. PALEA has a pending motion for reconsideration with the appellate court to keep the airline from going ahead with the spin-off/outsourcing program. “Of course, management will maintain the status quo if the Court of Appeals issues a restraining order. But to date, we have received no such order preventing us from carrying out the spin-off/outsourcing which has been upheld as valid by the Department of Labor and Employment and the Office of the President," he said. Olives added that Sky Kitchen Philippines (catering), Sky Logistics (ground handling) and SPi Global (call center) are now processing the applications of PAL personnel who decided to join the service providers after their employment is terminated. — VS, GMA News