PAL to dialogue with union for spin off, transition plans

Philippine Airlines (PAL) today (18 August 2011) said it would invite leaders of the PAL Employees Association (PALEA) for a dialogue to discuss the smooth and orderly implementation of the spin off program.

The flag carrier made the announcement following the release by Malacanang of a resolution upholding the flag carrier’s prerogative to spin off its catering, groundhandling and call center reservations units.

In a statement, PAL spokesperson Cielo Villaluna said the PAL management also plans to hold town hall meetings in the affected departments to discuss the mechanics of the spin off. Primers will also be distributed to guide workers on how to avail of their retirement benefits and gratuity pay which will be processed on a “first come, first served” basis.

Malacanang’s decision further validated the airline management’s plan to spin off non-core units and transfer these functions to third party service providers. No firm date has yet been announced as to when the spin off will be implemented.

PAL is allocating approximately P2.5 billion in severance benefits for the workers of three non-core units to be spun off. Based on the October 29, 2010 order of the Labor Secretary Rosalinda Baldoz, affected workers will receive separation pay equivalent to 1.25 months’ salary for every year of service, P50,000 cash as gratuity pay and other non-cash benefits. Malacañang earlier granted an additional P50,000.00 as gratuity pay.

The spin off plan – a measure intended to stabilize PAL’s finances due to the lingering effects of the global recession – had been affirmed as a valid and legitimate exercise of management prerogative. It will be recalled that the airline lost US$312-million for its 2008 and 2009 fiscal years. While it posted modest profits of US$72.5-million in 2010, it is again back in the red after registering US$10.6-million losses for the first quarter of its current fiscal year.

PAL’s spin off program was first upheld by acting labor secretary Romeo Lagman on June 15, 2010; recognized as legal as valid by Sec. Baldoz in October 29, 2010; and twice sustained by the Office of the President on March 25, 2011 and August 11, 2011, respectively.

Several workers of the affected units have already expressed interest to avail of the package while the three independent service providers await the smooth transition of operations.