Asia’s oldest airline back on top

In what has been described as its biggest downsizing ever in the last 20 years, Hong Kong-based Cathay Pacific recently announced it would be laying-off some 590 employees at its head office. Those who will soon be jobless include 190 people in various managerial positions (comprising about 25 percent of the management staff), while 400 are in non-management positions. Reports also claim that another 200 employees are poised for retrenchment – something that was vehemently denied by Cathay, which also assured that none of the pilots and cabin crew would be affected by the downsizing.

The airline posted $74 million in losses last year – the first time since the global financial crisis in 2008 – and it comes in stark contrast with 2015 when Cathay recorded $770 million in profits. Officials announced that the massive retrenchment was only the first step in the company’s over-all transformation of its business which has been facing tough challenges, among them the proliferation of budget carriers especially the state-owned ones from China.

According to industry experts, Cathay’s seat configuration for a Boeing 777 can carry as many as 275 passengers – a much lower capacity than an Air Canada B777 that can fit in as many as 450 passengers. While the loose-density seating configuration provides more legroom for economy class passengers, this has made the average cost per seat mile much higher for Cathay flights, resulting in more passengers opting for carriers with higher density but lower cost seats.

Singapore Airlines is also in the same position, with its 2016 profits plunging to 55 percent or S$360 million and down nine percent for the first quarter in 2017. But unlike Cathay, however, SIA had the foresight to go into the budget travel business by launching Tiger Air, Silkair and Scoot airlines – which all seem to be doing well. Observers note that Cathay Pacific and Singapore Airlines – which have been rivals for the longest time – have both been affected by the direct flights offered by low-cost Chinese airlines that have also been rapidly expanding.

At the recent Global Airport Leaders Forum in Dubai, aviation industry leaders noted the various challenges that carriers face. Among the long-term ones include technology which plays a critical role in improving customer experience, and the same goes for infrastructure. Among the short-term issues include political unrest and uncertainty in oil prices as this can affect the cost of travel and will put the profitability of airlines at risk. In fact, even low-cost airlines like AirAsia have been affected by the volatility in oil prices, judging from the 30 percent plunge in its first quarter net profit due to higher fuel costs despite the fact it registered more passengers. AirAsia, however, is confident it will see higher profits this year despite lower first quarter earnings.

Over the years, Asia’s oldest airline – Philippine Airlines – had also faced numerous challenges in the more than 75 years that it has been in operation. One of the toughest came in the wake of the 1997 Asian financial crisis that also forced the airline to downsize and cut down routes. Disputes between management and the employees’ union resulted in a shutdown of operations in 1998 – during which time Cathay Pacific took over the flag carrier’s domestic and international operations.

In fact, there was already talk about selling the country’s flagship airline to the Hong Kong-based carrier – but PAL chairman Lucio Tan held steadfast despite being under tremendous pressure to sell or just totally close shop. But in the famous words of “El Kapitan” – “Philippine Airlines is the Philippines and the Philippines is PAL, and so I cannot let them go down” – and his unwavering conviction has kept the airline afloat.

Under the able stewardship of PAL president Jaime Bautista, Asia’s oldest carrier has seen a dramatic turnaround that saw its return to profitability starting in 2014 after suffering from losses for three consecutive years – a feat recognized by the Center for Asia Pacific Aviation (CAPA) which awarded PAL with the CAPA Asia Pacific 2016 “Airline Turnaround of the Year Award.”

Jimmy has put PAL on an even keel, and he is confident the airline company will be able to achieve its target to become a 4-star airline within the year – a major step in its ultimate goal to be ranked as a 5-star airline by 2020. He also disclosed that several foreign investors have indicated interest in acquiring stakes in PAL, although he admits that the declaration of martial law and the current unrest in Mindanao can be challenging.

Pasig Rotary Foundation breaks ground

Three organizations – namely the Rafael Garcia III Foundation, the Rotary Club of Pasig and the Luxid Foundation  – composed of members of the Ateneo de Manila University’s GS ’59, HS ’63 and College ’67 classes – took part in the groundbreaking ceremonies for the construction of a three-story building in Barangay Pinagbuhatan in Pasig. The proposed building – which will house a seminar room, a polyclinic and a microfinance cooperative – will rise in an area that used to be known as the location of the infamous “shabu tiangge.”

Joining the ground breaking are Mario “Babes” Oreta (fifth from left in photo) as well as Raffy Garcia, Dr. Jesus Acantillado, Rogelio Lim, Honorio Poblador, Jimmy Alabanza, Conrad Cuesta and other members of the Rotary Club of Pasig and the Luxid Foundation. Much earlier, the three organizations signed a memorandum of understanding at The City Club in Alphaland for the project.

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