In a statement on Wednesday, PAL president and CEO Jaime Bautista said they will abide by the recent decision of the labor department to enhance the separation benefits of the 2,600 employees who will be laid off.
Last week, labor secretary Rosalinda Baldoz recognized PAL management's prerogative to outsource 3 non-core operations to be more cost-competitive in an industry where the players have increased and fares have raced to the bottom.
Bautista said the planned spin-off of the in-flight catering, airport services, and call center reservations was initially estimated to cost about P2 billion, based on the earlier decision by the Department of Labor and Employment (DOLE) that was contested by the union.
The modifications in the financial and non-cash benefits will cost an additional over P400 million, according to the PAL statement.
"This is a bitter pill we have to swallow," Bautista said. The airline has suffered financial losses due to the residual impact of the high oil prices and the limits in additional flights as a result of the regulatory decisions of the US and the European Union aviation bodies.
To finance the higher separation packages, Bautista said they are considering availing of additional loans from government banks, particularly the Development Bank of the Philippines or Land Bank of the Philippines. "If this is not possible, we will seek financing from other PAL creditors," 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," he stressed. "They will all receive their respective separation pay and benefits that are much more than what the Labor Code provides."
He then urged PALEA leaders to also respect the DOLE decision.
But PALEA president Gerry Rivera said they would exhaust all legal means to prevent the layoff.
PAL's position comes a day after the Philippine Airlines Employees' Association (PALEA), the ground crew union at PAL, staged a protest action at the historic Mendiola Plaza historic Don Chino Roces Bridge (formerly Mendiola) near Malacañang despite PAL's threat of charging them with abandonment of work.
The labor department has averted a strike that could have paralyzed the operations of the local carrier. The Aquino government, which has initially intervened when the labor issues has worsened mid-year, had said they will abide by the decision of the labor department.
No jobs lost
Bautista added that the 2,600 PAL employees who will be laid off can seek employment again at the companies that will absorb the outsourced services.
"Sec. 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 of applying for positions in the third party service providers if they so choose," he said.
e-Ventus, the call center arm of telecommunications giant Philippine Long Distance Telephone Company (PLDT), will absorb the reservations and phone customer service operations, while Sky Kitchen and Sky Logistics, both owned by Cebu-based businessman Manny Osmena, will soon provide the outsourced catering and airport services, respectively.
"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 ended.