PAL to let go of 2,300 employees in new round of layoffs
MANILA, Philippines (UPDATE 5:49 p.m., Feb. 2) — Philippine Airlines (PAL) is shedding another 30% of its already decreased workforce as the Asia’s oldest commercial carrier struggles to get back on its feet a year since the pandemic started.
“Approximately 2,300” employees of the Tan-led airline are either being let go or offered voluntary separation packages, PAL said in a statement on Tuesday. The subjected employees will only be “employed until mid-March 2021.”
“This has been an extremely difficult and painful decision,” PAL President Gilbert Santa Maria was quoted as saying.
The announcement came after trading hours. On Tuesday, shares of PAL Holdings Inc., which owns PAL, closed up 0.31% at P6.50 each.
PAL said the retrenchment is part of a bigger recovery program, which in November was reported to include an application for court protection against its creditors. That has not been confirmed yet, although more capital had already been infused and non-aviation assets were sold for the airline to survive.
This marked the first drastic cut in PAL's workforce after 300 people were let go in February last year just before coronavirus reached pandemic proportions. In October 2020, the flag carrier announced plans to lay off 2,700 employees by yearend, but that did not push through until this latest smaller retrenchment.
Months after, these cost-cutting measures appeared to be not enough to keep the airline afloat. From January to September 2020, PAL booked net losses worth P29.03 billion, more than four times wider than same period in the previous year.
“Prior to the retrenchment, PAL chose to implement temporary furloughs and flexible working arrangements to hold off job cuts as long as possible…,” the airline said.
“The retrenchment program was communicated to employees as early as October 2020,” it added.
PAL’s financial woes reflect a broader uphill climb for the aviation sector toward recovery. While the economy has slowly reopened starting June last year, and some foreign flights were allowed beginning October, tourism has not restarted and foreign travelers are still banned in the Philippines.
In fact, PAL said only 30% of its typical weekly flights in normal times had gone back to operations since the government started lifting lockdowns.
The Duterte administration had also rejected using taxpayers' money to rescue failing firms during the crisis. Instead, state lenders were asked to extend cheap loans to struggling companies, aid which airlines had said were insufficient to assist their rebound.
With the bigger PAL hurting, budget carriers AirAsia Philippines and Cebu Air Inc. were also left with no choice but to reduce manpower with flights still limited. For instance, in July last year, Cebu Pacific slashed 25% of its employees.
Editor's note: Story amended to say that PAL layoff plans in October did not push through
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