PAL offloads its excess baggage

Ripping through turbulent skies, Lucio Tan-owned Philippine Airlines (PAL) is getting rid of all the extra weight.

Clearly, PAL, which was already facing difficulties even before the coronavirus disease 2019 or COVID-19 pandemic disrupted global air travel, needs to do everything in its survival handbook to make it through this crisis.

In its town hall meeting on Thursday, insiders said PAL management announced it was looking to return 10 leased wide-bodied aircraft. These are the sleek and sexy, but more expensive wide-bodied Boeing-777 and the Airbus 330 and A350. PAL has a fleet of over 60 aircraft.

Desperate times call for desperate measures indeed.

The bad news that goes with that though is that it might mean some of the flag carrier’s over 1,000 pilots will be grounded for a long time, or let go altogether.

It’s still unclear how many pilots will be affected, but some of the leased aircraft need at least three pilots, insiders said.

The final decision will also depend on the destinations or flights where some of the leased aircraft are used. For example, flights to destinations that are not likely to pick up in the coming months may be scrapped and, thus, the wide-bodied carriers may not be needed anymore.

Aside from getting rid of the wide-bodied carriers, PAL may also continue to downsize, say insiders who attended the town hall meeting. Nothing is final yet, but management assured employees that it is doing everything it can so PAL will make it through this difficult time.

Carmen Tan steps down as vice chairman

The town hall meeting came on the heels of recent board changes, which are said to be part of PAL’s move to professionalize the organization.

Another change in the flag carrier is that Tan’s wife, Carmen, stepped down as vice chairman, management said in a letter to PAL employees last July 27.

“Ms. Carmen Tan stepped down as vice chairman and the position remains vacant,” PAL president and COO GIlbert Santa Maria said in the letter.

On behalf of management, Santa Maria also expressed “profound gratitude” to Tan’s son Michael and Tan’s daughter Vivienne, who both stepped down as directors of the powerful PAL board last July 23, “for their respective contributions to the stewardship of PAL through the years.”

Vivienne, employees were told, also quit her role as executive vice president-chief administrative officer of PAL effective July 23 and the position is left vacant.

Government support

Management said PAL is not out of the woods yet as some flights, which could have churned in revenue, did not push through.

“All told, we were only able to operate 123 regular flights in June, just 18 percent of our plan to mount 682 limited flights that month. These challenges did not deter us from operating 222 sweeper and repatriation flights and 640 all-cargo flights since March 2020,” Santa Maria said in the letter.

PAL also transported the remains of deceased overseas Filipinos from Saudi Arabia back home to their families, a testament to the flag carrier’s commitment “to enhance national interest and provide aid and comfort to Filipinos who are doing their duties as OFWs, medical frontliners, entrepreneurs, farmers and service workers.”

It continues to seek government support.

The letter did not specify what kind of support the company is asking, but airline industry players said the best option would be a grant or subsidy, either wage or landing fee subsidies; next would be a credit guarantee to private banks so they could lend to the struggling airlines; and the other option is capital infusion through equity or convertible debt.

Whichever type of government support PAL and other airlines will get, PAL’s roughly 6,000 employees are all hoping the company will survive the crisis.

One longtime PAL employee shared with me her sentiment: “This is our flag-carrier, our national pride. We don’t want to see it go down.”

Stiffer penalties eyed for cigarette smuggling

While other industries are trying to survive the pandemic, one illegal business is raking it in – the lucrative smuggling trade – as unscrupulous traders take advantage of the lockdown when legal domestic cigarette production had to stop.

Because of this, the Department of Finance wants heftier penalties for illicit cigarette traders, a move supported by the country’s cigarette companies.  Even senators are calling for stiffer penalties, saying that smuggling hurts local industries and deprives government of much-needed revenue.

“One way is to make the law more restrictive by making it a non-bailable offense, imposing higher cash fines, and slapping a longer jail time,” an industry source said.

I agree. At present, the minimum cash fine for smuggling is P50 million, which is probably just loose change for a big-time smuggler.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com