Philippines Aviation NEWS: Palea ignores Palace, files strike notice

As if to defy the impending decision of President Aquino on the question of spinning off three non-core businesses of Philippines Airlines, the company’s rank-and-file union filed yesterday a strike notice charging the airline with refusal to bargain.

A PAL official told Malaya Business Insight in a telephone interview that the company cannot pre-empt the final decision of President Aquino, who is reviewing a ruling of the Department of Labor allowing about 1,600 members of PAL Employees Association (PALEA), the union, to be transferred to the three non-core businesses which will be spun off.

PAL will have to raise about P2.5 billion to pay retirement benefits of the employees who will be transferred to the spun-off companies now owned by other businessmen not related to stockholders of the airline.

Labor Secretary Rosalinda Baldoz upheld the right of PAL to survive by reducing its payroll costs. However, the employees’ benefits from her decision are far bigger than what the law and the collective bargaining agreement of PAL allow.

The union appealed to the President, questioning not only the spin-off but the outsourcing of PAL workers as an effort to increase efficiency and cut costs.

The strike notice, according to a PAL union officer himself, has the effect of withdrawing the appeal to the Office of the President, which is expected to make a final decision in the next few weeks.

The CBA of PALEA has expired but the union agreed to a moratorium on collective bargaining pending resolution of other issues.

The period of moratorium has also expired but the Office of the President acquired jurisdiction over the dispute at the behest of the leaders of PALEA themselves.

An official of PAL explained that negotiating a new bargaining agreement is not difficult. But he pointed out that management is prevented from doing so because the matter is pending with the Office of the President.

"We will have to abide by whatever decision the President is expected to make," a PAL official. This opinion was shared by a union official who did not want to be named obviously because he does not want to be ostracized by the members of the rank-and-file group.

He pointed out that more than 100 of the 1,600 employees have initially but officially agreed to the terms of the ruling by the labor secretary by accepting initial retirement benefits pending final resolution of the issue by the Office of the President.

An insider in Malacañang hinted to Malaya Business Insight that Executive Secretary Paquito Ochoa, who heads the group sinking its teeth into the resolution of the controversy, is weighing the effects of the impending decision on the future of PAL as the national flag carrier and to the tenure of the employees who will not lose their jobs but will be paid handsome retirement benefits.

Another Malacañang source said the 1,600 employees are to be retired, paid their benefits far above what the law requires and will continue having jobs in the companies that will be spun off because their operations are expensive to PAL and therefore contribute heavily to losses.

The union official said "we have the best of both worlds." He explained that some of the employees will get benefits of higher than P1 million each and will be transferred to other types of work in the spun-off companies.

The PALEA is expected to take a strike vote if it is to make good its threat to strike. The union earlier filed a strike notice and took a strike vote claimed to be favored by 84 per cent of the union members.

However, the union official said, the records of the voting were not submitted to the Department of Labor as required by law.

The union members decided not to call the strike as the Department of Labor took over jurisdiction of the dispute. The controversy is now under the Office of the President.

The PAL official said, "We cannot sit down at the bargaining table with the union while the question is pending resolution with the Office of the President. Neither we nor the union can usurp the powers of the President."

There is a prevailing sentiment among the leaders of the union that the group of Lucio Tan, which practically owns all of PAL, will not make good its threat to close down the company if it continues to suffer losses from heavy payroll costs and continuing rises in the price of aviation fuel.

It will be recalled, however, that it is the same problems with labor that forced Tan to close the company on Sept. 23, 1998. It was reopened on Oct. 7 in answer to the request of the union to President Joseph Estrada to save thousands of jobs in PAL.

Sources said PALEA president Gerardo Rivera was one of the signatories to the request.

In reply to the request, President Estrada asked Tan to reopen the airline because a closure will give the Philippines the reputation of being one of very few countries in the region without an officially-designated national flag carrier.

The creditors of PAL required Tan and his group to put in an additional $200 million when the airline was placed under rehabilitation.

"All of that money has been eaten away by losses," a PAL official said. He said the audited financial statements are available to the union for examination in answer to claims that the airline is making money.

By
Neha Jain

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