Is the Worst Really Over at PAL? Not Quite, as Workers Brace for More Turbulence

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 workers and supporters from Anakpawis and other progressive groups hold a picket in front of PAL’s corporate headquarters on Thursday. (Photo by Marya Salamat /

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.” (

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  1. What we, the people of the Philippines must know that this is not isolated to Philippine Airlines alone. There are a lot of companies doing this discriminatory practice in the guise of "business sense" and legal mumbo jumbo. There might have been amendments to our constitution that have tipped the scales too much in favour of unethical business practices that serves only the few. If there is conflict of interest wherein an owner deliberately sets his course down the path toward bankruptcy, the people working in it revolt, as what is happening to PAL now. How in the world can it be logical for an owner to chop up a company, sell off or spin off the earning assets and put up a parallel company to compete against the former? Create decisions that will indebt the company to the oil companies for so long then charge the riding public and much worse, their employees for their folly. With whatever is leftover, declare it losing or bankrupt and leave the people working in it with not even a livelihood? Then puts up a new company, hires a new batch of employees or transfers some from the old with less than half the salary and no benefits and much worse no job security? And to top it all off, make a killing from the other companies he puts up and be named the richest man in the land? Why is that? Isn’t this the modern version of the form of slavery that was abolished ages ago by the supposed civilized world? If so then we no longer live in a democratic nation. We are a country oppressed by the oligarchs who believe they alone have the right to enjoy the benefits of our constitution. This must be stopped.

    Wake up! Make sense of what is going around you. Work not for your own alone but for all of us.

    We can point the blame at so many others for bringing us to where we are now but ultimately, we have only ourselves to blame; for doing nothing. The saying “the only thing for evil to flourish is for the good to do nothing” holds sway right now in our lands. Let us do something about it and believe that with the present leadership, no matter how imperfect it is, we have the potential to accomplish this.

    We fervently hope that this government of ours is a government of the people, by the people and for the people. Let that hope not die for whom else can we turn to right now that will have any semblance of the remaining trust, no matter how meagre it is; to bring us out of this hell we are living. “Happy to serve.” Really?

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