PAL says spinoff a survival strategy to save more jobs

MANILA, Philippines - Philippine Airlines (PAL) said its planned spin-off affecting more than 2,600 workers is a survival strategy meant to save the jobs of more than 4,000 employees who will be left behind to run the restructured airline.

Reacting to a labor protest-rally against PAL’s spin-off program in Makati Thursday, PAL spokesperson Cielo Villaluna said the flag carrier must ‘change or perish’ in an industry buffeted by massive losses in the last two years.

She said almost all airlines in the world have done or are currently undergoing painful restructuring to adjust to new global business realities. “It cannot be business as usual: the global economic crisis of 2008 showed that airlines are in real danger of closure or bankruptcy without restructuring,” Villaluna pointed out.

She stressed that PAL’s survival strategy calls not only for cost-saving measures but also the need to be more efficient and to concentrate on its core business of flying airplanes.

“PAL’s spin off program is not ‘contractualization’ as our friends in the labor movement claim. PAL said it is closing down its catering, airport services and call center divisions to allow more efficient third party service providers to do the job. Hence, affected employees will be retired early and paid their separation benefits in accordance with the ruling of the Department of Labor and Employment (DOLE). It’s entirely up to them [workers] if they want to join the new service providers or not,” she stressed.

While members of PAL workers’ union have the right to question the airline’s spin off program, Villaluna reminded them that investors and employers have rights, too.

“Labor rights cut both ways. They’re not in favor of workers alone. Investors like PAL are also protected under the country’s laws, specifically the Constitution, the Labor Code and existing jurisprudence,” Villaluna said.

The PAL Employees Association (PALEA) has urged Malaca˜Nang “to intervene in the PAL row in the interest of safeguarding constitutionally mandated workers’ rights in the face of [PAL’s] corporate restructuring.”

Villaluna argued that while Article XIII Sec. 3 of the 1987 Constitution mandates the state to protect labor rights and security of tenure, the same section of the Charter also enjoins the state to recognize “the right of enterprises to reasonable returns to investments, and to expansion and growth.”

“Given such Constitutionally-guaranteed rights, businesses have the right to restructure or reduce their workforce due to compelling economic factors, to carry cost-efficient programs that would ensure return on investment (ROI), and adopt measures that would make their businesses more competitive. However, this must be done in a lawful, just and humane manner, hence the need to pay retired workers the commensurate separation benefits,” Villaluna said.

DOLE had upheld that the airline’s spin-off program was done in good faith and recognized management’s prerogative to reorganize its corporate structure for the viability of its operations, to cut costs, and to guarantee the airline’s continued survival.

PAL lost $297 million or almost P14 billion in 2008 and another $14 million for its fiscal year ending March 2009.