PAL likely to proceed with job cuts

MANILA, Philippines — Philippine Airlines (PAL) is likely to proceed with its retrenchment program within the fourth quarter to ensure the survival of the airline.

An industry source told The STAR that there is only a slim chance that PAL would not push through with its manpower reduction initiative, which could affect up to 35 percent of the airline’s more than 7,000 workforce.

This is unless a “knight in shining armor” arrives or “sweeping” assistance from the government comes, but time is of the essence, the source said.

The source said if the company maintains the same number of people and it doesn’t restructure the business, the flag carrier would not survive.

Labor Secretary Silvestre Bello   said earlier PAL may no longer pursue its plan to retrench workers if it sees signs of recovery on the horizon.

Bello dispelled fears of renewed massive displacement of workers over the plan of PAL to terminate more than 2,000 of its employees.

“The government is confident the airline industry can get back to its feet anytime now because we are already allowing more trips in and out of the country, especially the travels of our countrymen seeking employment overseas,” Bello said.

Air travel, however, is not expected to normalize soon, and may take another three years to do so, the source said. The source added that Bello’s statement has sown confusion among PAL employees.

PAL started early this month its call on employees to apply for voluntary separation as the initial stage of its manpower reduction initiative.

The retrenchment program will combine voluntary and involuntary measures, to be carried out within the fourth quarter.

Due to the impact of the COVID-19 pandemic on the aviation industry, PAL since March has suspended capital expenditures, adopted a skeletal workforce, reduced management salaries and slashed non-essential expenses to control costs.

It has already let go of 300 people last March, 200 of whom were retrenched and 100 opted to retire early.

PAL’s shareholders have infused capital and provided funding to sustain the airline’s liquidity.

Sources said no decision has been made yet as to the various possible options the airline would undertake to restructure obligations.

Last month, PAL said refund requests received by the airline due to flight cancellations since March have reached over $300 million, about a fifth of which has yet to be refunded   as it continues to suffer from the impact of the   pandemic.

The airline has so far restored nearly 15 percent of its regular domestic and global network.

PAL, which saw its first semester losses balloon to P22.02 billion from last year’s P3 billion, continues to mount special repatriation flights to help bring home stranded Filipinos from the Middle East, Europe, North America and all over Asia, as well as all-cargo services to meet the essential cargo transport needs of the public and support economic supply chains.

The airline has postponed its 2020 and 2021 aircraft deliveries, rescheduling them for delivery in 2022 to 2025.

The International Air Transport Association (IATA) has recently downgraded its global traffic forecast for the year to reflect a weaker-than-expected recovery.

IATA said it now expects full-year 2020 traffic to drop by 66 percent compared to 2019. The previous estimate was for a 63 percent decline.