Is the worst really over at PAL?

IN THE face of mounting calls for the government to investigate Lucio Tan’s alleged losses and abuses of his employees in Philippine Airlines, the Aquino government has retreated from further intervention in the ongoing labor disputes in the airline, suggesting that the trouble at the country’s flag carrier may be over.

But is it?

After brokering a dialogue between PAL pilots and management last Thursday, Malacañang claimed satisfaction at having “opened communication lines between the two parties” that led to “a commitment from PAL management not to do the things that the pilots viewed as discriminatory.”

Without delving into why communication lines between pilots and management were shut down in the first place — the pilots lost their union to PAL’s union-busting in 1998 — presidential spokesman Edwin Lacierda told reporters last week that the government has “options on reserve,” except a takeover of PAL, should the flying public got affected again.

Lacierda said the government’s “overriding concern is the riding public” for whom, Malacañang now believes, “the worst may be over” because of the dialogue it brokered between the pilots and management.

But to the rest of PAL employees, things may not be as reassuring.

Last week, some members of the ground employees union PALEA joined the Kilusang Mayo Uno (KMU) and Anakpawis in a picket in front of PAL’s corporate offices in Makati. The group denounced Lucio Tan for “intensifying the exploitation and pushing for the layoff of workers in the airline.”

They also called on the government to investigate Tan’s profits and alleged anti-labor schemes. More protest actions of PAL unions have been scheduled next week.

Threat to Job Security

“Just because the PAL management has agreed to some of the immediate demands of the pilots doesn’t mean that job security and justice have already been granted to the pilots and the majority of PAL workers,” said KMU chairman Elmer Labog in a statement. “The threat of contractualization remains very real, as 3,000 employees stand to lose their tenure, or even their jobs, soon. So everyone who works in PAL has reason to worry and protest.”

Despite the government’s brokered dialogue between PAL pilots and management, PAL pilots remain unrepresented by a union to this day. They also remain as some of the lowest paid pilots in the region, with little retirement benefits and insecure job tenure to boot, as pilots who resigned had disclosed to the media.

Without a union, pilots are also more vulnerable to gag orders, said members of PALEA who have refused to sign a waiver currently being distributed by PAL management to all employees, from pilots to cabin crew and ground workers. The waiver allegedly forbids them from divulging to anyone any information related to the company.

The mass resignation of pilots last week exposed Tan’s scheme to employ them as lower-paid contractual employees in his budget airline, Air Philippines. But the same scheme is intended for nearly half of the 7,400 PAL workforce, Labog said.

Aside from the pilots, the cabin crew union and ground employees’ union are set to talk with PAL management on different dates at the Department of Labor and Employment (DOLE). Both raised issues about PAL management’s efforts to cut workers’ salaries and reduce benefits.

The 1,600-strong Flight Attendants and Stewards Association of the Philippines (FASAP), for instance, is seeking to break the three-year deadlock of their collective bargaining negotiations with PAL management. The 3,700-plus PAL Employees Association of the Philippines (PALEA), meanwhile, wanted to start negotiating for a new CBA following the end of their almost 12-year CBA moratorium. But PAL management has so far been blocking this with plans to terminate nearly 3,000 of their members and transfer them as contractual labor to Tan’s other companies, some of which are allegedly dummy firms.

During former President Arroyo’s last two weeks in office, the DOLE gave PAL the go signal to implement Tan’s scheme. PALEA has since opposed it, with the union officials accusing then acting labor secretary Romeo C. Lagman of favoring Tan.

PALEA president Gerry Rivera told Bulatlat at the sidelines of one of their protests at the labor department that aside from the planned contractualization via a “spin-off” of three PAL departments, there is already an ongoing contractualization of their present jobs.

He said a “very conservative estimate” of more than 1,500 jobs in PAL today may already be contract-based. Anakpawis in PAL said regular PAL workers who retire are being replaced by contractual and not regular personnel. PALEA believes the spin-off will only fast-track the contractualization process already underway in the airline.

Lucio Tan’s Expansion

The excuses repeatedly being used by PAL management to justify the forcible transfer of employees, among other things, chiefly revolve around the “losses being incurred by PAL,” which began in 2008 after it exited from a government-backed rehab. The Anakpawis in PAL is disputing the alleged losses.

In a previous statement addressed to PAL employees, Anakpawis charged that PAL management had used this line before — in 1998, to justify the termination of 5,000 employees; the spin-off of a profitable PAL department, the maintenance and engineering department; the union busting of ALPAP, then the pilots’ union; and the CBA moratorium for the ground employees, among others.

The Lucio Tan Group, Anakpawis said, profited immensely from these moves and is now seemingly bent on doing the same thing this time around.

There is an unfortunate sense of déjà vu in PAL today that diverse groups — from the International Transport Workers Federation to KMU, Anakpawis, partylists and labor groups with different political leanings (from Ka Paeng Mariano’s Anakpawis Partylist to Akbayan and TUCP, said Rivera of PALEA) — have called on the government to intervene and investigate.

“Lucio Tan, the Philippine’s second richest tycoon, is always thinking about reducing costs, when PAL has actually a reported P369.58 million in net profits and P81.24 billion in total assets last year,” Labog said. “How much more wealth does he want to amass by exploiting workers?”

A cursory look at PAL’s financial statements reveals that PAL, or its parent company, Lucio Tan Group, appears headed to a repeat performance of 1998, in the sense that they are not actually incurring losses but are engaged in a business expansion in the aviation industry, propelled by strong government support and more profits squeezed from various cost-cutting schemes in employees’ salaries and benefits.

PAL spokesperson Cielo Villaluna had said the airline expects to save anywhere from P500 million to P1 billion in monthly salary costs through the planned spin-off that would affect some 3,000 regular jobs.

The Lucio Tan Group appears to be banking on this because right after exiting from rehab in 2007, where it used the government to protect itself from its foreign creditors, PAL went on a buying binge of aircraft — just like what it did in 1998.

In a statement, Anakpawis in PAL noted that during the rehab, PAL managed to pay off the aircraft it bought from loans, “while many of us are still regular employees enjoying some benefits and the protection of our union.” The group scored the Lucio Tan Group for the planned retrenchment and contractualization. The group also questioned the impending transfer of many PAL aircraft to Lucio Tan Group’s budget carrier Air Philippines. In 2009, PAL gave two Airbus aircraft to Air Philippines through a “lease agreement.”

It is this planned transfer of more aircraft to Air Philippines — which was denied by PAL president Jaime Bautista, who also told DOTC last Thursday they would not do that anymore — that had forced some PAL pilots to resign a week ago.

New Aircraft

From 2007 to March 2009, PAL received all nine Airbus aircraft it ordered shortly before exiting rehab. In 2008, PAL also decided to purchase additional two Airbus for delivery in 2011. The years after that, PAL expects deliveries of additional four Boeing aircraft at least. PAL also acquired a total of eight Bombardier aircraft from 2008 to 2009.

Prepayments plus annual staggered payments for all of these aircraft would naturally eat up into PAL’s income beginning in 2008. Should these be considered as “losses?” Anakpawis asked. In the said period, too, PAL fully paid up about four Airbus aircraft, only to sell it and lease it back again, thus recording additional liability in its financial statement.

The question on many of the employees’ mind now is whether Lucio Tan can get away — again — with a refleeting program for its aviation businesses on the wings of state support and more degraded employees.

So far, signs say the government is favoring PAL. Note that the Aquino government did not say anything about the pilots’ lack of a union. It also relegates the PAL issue to the DOTC and DOLE, where the DOTC and Malacañang are concerned only with the “interest of the riding public.” And the new DOLE secretary has previously defended in a TV interview the labor department’s approval of PAL’s planned spin-off of three departments.

“If it is really sincere in addressing the labor issues that caused the recent storm in PAL, the Aquino government should reverse the Arroyo administration’s decision allowing the contractualization of about 3,000 PAL workers,” KMU said in a statement.

“Unless the DOLE reverses its decision, the Aquino administration will be seen as a protector of the interests” of Tan, KMU’s Labog warned. Lucio Tan, he added, “can enforce more schemes to exploit workers, confident that the government will back him (up). And all these can lead to greater ‘storms’ in the airline company.” Marya Salamat/


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