PAL workers willing to settle in row over outsourcing plan

October 22, 2009

By Louella D. Desiderio

RANK-AND-FILE Philippine Airlines (PAL) employees are seeking discussions with the airline management outside the Labor department’s supervision on the company’s plan to outsource "non-core" services.

PAL Employees Association (PALEA) President Edgardo C. Oredina said in a telephone interview yesterday that the group has sent a letter to PAL Chairman Lucio C. Tan asking the management to reconsider its plan to outsource ground-handling jobs.

He said the group stated in the letter that it was willing to forge a compromise agreement to help the management cope with the economic downturn. "We would like to discuss with the PAL management other cost-saving measures to address the crisis and prevent the implementation of the outsourcing plan," he said.

The management’s decision to outsource, he said, came at a time when union members were suffering from the harsh effects of tropical storm Ondoy.

The letter was submitted to the office of Mr. Tan on Oct. 8, the same date that PALEA asked for a suspension of preventive mediation at the National Mediation and Conciliation Board.

"We opted to suspend the proceedings because nothing is happening. There is no change in PAL’s position on the planned outsourcing," Mr. Oredina said.

With no hope of reaching an agreement with the PAL management, the group had considered taking "mass action" to oppose the outsourcing plan, which the union claims will leave as much as 4,000 workers jobless.

He said the group later decided to defer protests after PAL President Jaime J. Bautista informed him by telephone last week that the serving of notices of termination to employees under departments set to be outsourced would not push through and that the management would meet with the PALEA for further talks.

The talks, he said would likely take place next week.

Mr. Bautista could not be reached for comment yesterday.

On Sept. 22, PALEA filed a request for preventive mediation at the Labor department over the airline’s plan to outsource services including catering, passenger handling, ramp handling, and cargo-handling operations.

The plan was disclosed by Mr. Bautista to union officials in a notice dated Sept. 9. In the notice, Mr. Bautista said some services needed to be outsourced to prevent further losses and preserve the airline’s assets.

PAL has more than 8,000 employees, with half belonging to the rank-and-file union.

In 1998, PAL was forced to go into receivership in the aftermath of the Asian crisis. It returned to profit in 2000 and was declared in financial health two years ago.

For the fiscal year ending March, PAL lost $301.4 million as a result of higher expenses brought about by the cost of operating more flights and last year’s record-high fuel prices. The airline, however, reported $35.5 million in profits for its first quarter ending June. - Businessworld.

Caticlan Airport Upgrade Found Fraudulent

Governor wants ECC Revoked for Misrepresentation

October 20, 2009

Kalibo - Aklan Gov. Carlito Marquez has asked the Environment and Natural Resources Department to recall the environmental clearance certificate issued to the developer of Caticlan airport for violating several provisions of the permit.

The Boracay Foundation Inc. also supported the move of the Aklan provincial government to limit the development of the airport for domestic operations only and not as an international airfield.

According to Marquez, the Caticlan International Airport Development Corp. will level the Caticlan hill for the upgrading of the airport.

Marquez said the ECC issued in 2006 by then Environment Secretary Angelo Reyes was recycled and became the basis for the National Economic and Development Authority to approve the plan to upgrade the airport.

The Caticlan developer did not comply with the three major components of the July 2006- issued ECC, which include proper consultation with provincial officials, to form a multi-partite monitor team and the social responsibilities with stakeholders.

Director Edwin Trompeta, regional head of the Tourism Department, insisted that their priority is to chop off a portion of the hill so that the entire length of the runway can be fully used by airplanes landing and taking off in Caticlan.

But a study conducted by Dr. Ric Javelosa, a morphologist of the Mines and Geosciences Bureau, warned that leveling the hill will make the beaches of Boracay disappear.

Javelosa explained that people in the environmental community consider the hill in Caticlan to be the main driver and generator that allows the gentle monsoon breezes to create such fine and polished sand that Boracay is known for.

The governor also urged the Environment Department to find out how the Neda approved the controversial project when the Reyes-issued ECC did not mention anything about leveling the hill at the end of the existing runway.

TNT flies largest relief airlift to RP

Brings 200-MT WFP emergency rations Free


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TNT country general manager Cetin Yalcin (left) and WFP country director Stephen Anderson inspect the 100-ton shipment of high-energy biscuits at the airport. Rudy Santos

TNT and the United Nations World Food Programme (WFP) have mounted the largest airlift of food relief to the Philippines todate, flying in a total of 200 metric tons of high-energy biscuits for victims of the recent floods.

Already, a 100 metric ton shipment arrived on October 17, 2009 with a second 100 metric tons arriving next week, on October 24.

The food assistance will be loaded from Izmir, Turkey, and will be flown to the Philippines onboard TNT’s Boeing 747-400 Extended Range Freighter. The freighter was diverted from its regular return flight from Liege in Belgium to Hong Kong to perform the humanitarian mission.

Most of the 200 tons of biscuits, which have been fortified with essential vitamins and minerals, will be used in supplementary feeding programmes to enhance the nutritional health of pregnant women, nursing mothers and children under five years old. In cooperation with the Philippines Department of Social Welfare and Development, WFP will target the biscuits to areas worst hit by flooding.

“Thousands of young mothers and children are going to benefit as a result of this generous gesture on the part of TNT,” according to Stephen Anderson, WFP Country Director in the Philippines. “We owe TNT an enormous debt of gratitude for providing this service, which will save us close to $750,000 in shipping cost. We are also grateful to the Government of Australia, who provided WFP with US$1.75 million in cash, part of which has been used to purchase the biscuits.”

Right after super typhoons Ondoy and Pepeng (international names Ketsana and Parma, respectively) devastated parts of the country causing massive loss of lives, properties, crops and livelihoods, WFP immediately initiated relief activities for the victims. Working closely with the WFP, TNT processed incoming shipments at the airport last October 2 and used seven trucks to transport 40 tons of food aid to the affected areas. To date, TNT is on stand-by to transport more relief materials as determined by the WFP.

In addition, TNT coordinated with WFP in bringing in more food aid to the Philippines. “This new shipment was coordinated in a short period,” confirmed country general manager of TNT in the Philippines Cetin Yalcin.

“We obtained approval from our head offices Tuesday morning and in a couple of days, the supplier started production and we’re flying our B747. It was fast.”

While the shipment will prioritize the victims of the recent calamities in the Philippines, Yalcin says that TNT and WFP’s humanitarian assistance does not stop there. The two partners are present and active around the globe.

In the past few months, TNT and WFP also granted relief efforts to the victims of various catastrophes in Asia. The two organizations provided 50 tons of high energy biscuits to Indonesia for the affected families by the earthquake that struck the coast of Padang. In India, monetary donations for relief materials were allocated for those affected by the heavy rains that caused flash floods throughout Kartnataka and Andhra Pradesh.

The partnership between TNT and WFP started in 2002. So far, the logistics firm has contributed around US$50 million worth of support to WFP’s efforts worldwide.

PI's remaining operational DC-3 crashed

Kills four in Las Pinas
October 17, 2009

Quick Facts:
Aircraft: C-47B-1-DK
Manufacture Date: 1943 as 43-48476 intended for the USAF, later converted to civilian use
Serial Number:c/n 14292; msn 25737
Operator: Victoria Asia Air Services
Time of Accident: 1230 +8GMT
Crash site: Villa Fidela Subdivision, Barangay Aldana Quezon, Las Pinas City
Casualties: Benjamin Baculpo and Benjamin Rivera, Pilots, Richard Gidaya, airport mechanic and crewmember Jaguar Juane.
Remarks: The aircraft had taken off at runway 24 of the Ninoy Aquino International Airport for a routine flight to Palawan when it suffered engine trouble around 1220 and declared emergency landing but failed to reach the runway on time.

By Joseph Ubalde and Mark Merueñas,

At least four people on board a DC-3 plane were burned to death when the private aircraft crashed into an "abandoned" warehouse in a residential area in Las Piñas City on Saturday noon.

Firefighters inspect what's left of a DC-3 plane that crashed and burst into flames in a Las Piñas subdivision Saturday. Benjie Castro
Before crashing into the warehouse in Villa Fidela in Elias Aldana village, the plane, which was on its way to Palawan for a test flight, was already flying low and hit a nearby house, dzBB radio reported.

Rudy Garcia, E. Aldana village chief, said he saw four badly burned bodies, three of them men.

"Parang tatlong lalaki ito, yung isa hindi ko makilala kasi sunog na sunog (It appears to be three men, I can't figure out the other person because the body is badly burnt)," Garcia said.

It was not clear whether the recovered bodies were residents of the area or the passengers or pilots. Authorities said the plane was carrying two pilots and five crewmen. A search for the other passengers are on going.

According to a dzBB report, some of the bodies were severed. There were no signs of survivors on the plane as of posting time.

Eduardo Kapunan, deputy director of the Civil Aviation Authority of the Philippines, said Victoria Aviation, owner of the plane, is in the business of transporting goods. The plane that crashed had body number RPC 550.

Kapunan said he has already seen the flight manifest but refused to disclose the names of the passengers and the two pilots aboard the light craft, saying “Mas magandang manggagaling na lang sa Victoria."

Kapunan said a DC-3 plane is a World War II vintage aircraft used by the Air Force. “Pero lumang luma na kasi itong [nag-crash]," he said.

Earlier Lloyd Olipano, a concerned resident in Las Piñas, called radio dzBB on Saturday and said at least two houses were damaged when the aircraft fell.

"Ngayon lang po nangyari, kababagsak lang, nagliliyab pa. Hindi kami makalapit. (It happened just now, it just fell, it's still in flames. We can't go near it)," Olipano said.

According to him, firefighters have already rushed to the area. Olipano is pleading to authorities to shut down the electricity to prevent any fires.

Bureau of Fire Protection (BFP) chief Pablito Cordeta said the fire was put out at about 1:40 p.m. both by members of the BFP and airport security.

Video courtesy of GMANews.TV

Air Crash Investigation

By Vito Barcelo

Ernest Sacro, spokesman of the Civil Aviation Authority of the Philippines, said the ill-fated plane was the last of its kind in the country after three other DC-3s were decommissioned sometime in 2000.

“That was the last DC 3 I know still flying in the country. It was so old that its owner sold it for only P12 million,” Sacro said.

The Douglas DC-3 first flew in December 1935 with 16,079 aircraft frames built in its Santa Monica, California factory. Less than 200 airworthy frames remained in active service in 2009 mostly operating in the outskirts of Africa, South America and the United States.

Until its crash, the twin-engine plane was used for aerial spraying, freight transport and to shuttle skydivers.

Sacro said the crash not only killed the four people that were onboard but also burned the P2.5 million cash that co-pilot Jaguar Juane was carrying as down payment for the aircraft that had been sold to an unnamed Surigao del Sur businessman.

He said Juane was the younger brother of Gerry Juane, the plane’s real owner, although it was registered under Victoria Air Inc.

Initial Findings

Ernest Sacro said that initial report points to pilot error as the likely cause of the crash as the pilot in command, Benjamin Rivera and Juane, were licensed to fly only smaller planes.

He said the Authority’s legal department was looking into filing charges against its owner after it was told the plane was not insured.

“The scrap from the plane’s wreckage would not be enough to pay for the damages it caused,” Sacro said.

The plane departed Manila for Puerto Princesa City around noon, but the pilot turned the plane back minutes later asking for clearance for an emergency landing.

“It was not in a test flight as reported earlier. It was carrying six drums of aviation fuel and was supposed to fly to Surigao after it unloaded some cargoes in Brooke’s Point in Palawan,” he said.

The flight and cargo manifest appeared to be falsified, indicating there were seven people on board but only four were actually there. Carriage of dangerous cargo was also not reported.

The plane appeared to wobble, its wings tipping up and down erratically, before it scraped the roof of several houses and hit the ground and ignited.

“The plane’s left engine conked out but the pilot could have made a safe landing if he had pushed the left button to operate the engine’s fan,” Sacro said.

“Instead, the pilot pushed the right engine button fan, causing the plane to drop like a rock.”

Relief Work boosted by heavy lifters

UN Brings Russian MI 171 to expedite relief efforts!

October 17, 2009

MANILA - Relief donations for Typhoons Ketsana and Parma victims officially breached the $100 million mark as of Friday, October 17, 2009 the Department of Foreign Affairs said yesterday with the United Nations funding $44 million of relief assistance commitment to the country.
Emirates Sky Cargo. Relief goods from the United States Agency for International Aid (USAID) arrived at Ninoy Aquino International airport in October 13, 2009 from New York via Dubai on a special flight that filled the flagship of the Skycargo fleet, which was loaded in a Boeing 777-F1H with registry A6-EDF intended for typhoon victims that devastated the country leaving 650 dead and displacing 6 million people. They were turned-over to the UN International Organization for Migration (IOM) for distribution to the affected families. The UN's chief humanitarian official John Holmes said the body may have to revise upwards its flash appeal of 74 million USD for the Philippines issued last week. Image Courtesy Daylife.

United Nations. Russian crew members prepare an MI 171 Russian helicopter at the Villamor Air Base on October 15, 2009 before performing its first relief mission in the country distributing relief goods to typhoon ravaged northern Luzon island.Image Courtesy Daylife.

US Air Force. American soldiers (R) and Filipino police help unload relief goods carried by US Sea Knight helicopters at Loakan Airport in Baguio City, in the northern Philippines on October 11, 2009. Search and rescue teams struggled to reach areas of the northern Philippines cut off by storm-triggered landslides and flooding that have left more than 600 people dead, officials said. Altogether the death toll from Parma and tropical storm Ketsana, which killed 337 in Manila and surrounding areas, stands at 636, according to the civil defence office, with fears the toll could rise. $150 million capital investment program. Courtesy Getty Images and Daylife.
US Marines. U.S. Marines carry bags of relief goods from the Philippine government and the International Red Cross as other local residents line up to unload from a U.S.M.C. CH-46 Sea Knight helicopter intended for typhoon victims of Ketsana and Palma that devastated the country leaving 650 dead and displacing 6 million people. Image Courtesy Daylife.

Filipinos overseas and the international community have donated and pledged a total of $94,703,203 (approximately P4.41 billion) to victims of tropical storm Ondoy as of Thursday, the Department of Foreign Affairs said yesterday.
However, only 19 million dollars had been committed so far from the 74 million dollars the United Nations requested in a "flash appeal" last week, said UN Under-Secretary-General for Humanitarian Affairs John Holmes.

That money is just for relief connected to Tropical Storm Ketsana which hit the Southeast Asian nation on September 26. But the United Nations will have to ask for more than the 74 million dollars initially requested after Tropical Storm Parma battered the country from October 3 to 10, said Holmes.

"We will revise it (the sum). We may need to increase it," Holmes told reporters.

Meanwhile, the United Nations has loaned two helicopters to help the Philippine government in rescue operations and the distribution of relief goods.

The two dismantled MI 171 helicopters arrived on board a Russian Ilyushin 76 Cargo plane at the Ninoy Aquino International Airport Monday, October 12 from Antalia, Turkey.

Civil Aviation Authority clearance has been obtained for the two MI-171s serving the Philippines operation. The first flights took place Wednesday with destinations from La Trinidad/Baguio into surrounding cut-off and hard-to-access barangays in Benguet to perform assessment missions and deliver urgently needed relief goods.

Barry Came, UN World Food Program public information officer, said the Philippine government had asked for the helicopters.

The two helicopters can fly up to 600 kilometers non-stop and carry 20 people and some 2.5 tons of relief goods, he added.

One more helicopter is expected to arrive next week from Laos complementing the other two, he added.

The helicopters were immediately assembled for deployment and will be based in Camp Aguinaldo in Quezon City.

Meanwhile, the US government has committed two CH-46 Sea Knight helicopters as part of the relief effort with almost $5 million financial assistance coming from the United States Agency for International Development (USAID).

The Filipinos overseas as well as the international community have also donated close to $15 million with Australia heading the pack with A$ 3 million contribution.

On Oct. 3, Australia announced a further A$2 million (P80 million) on top of the A$1 million pledged earlier to feed thousands of people affected by the two typhoons.

It will be delivered through the World Food Program (WFP) in partnership with the Department of Social Welfare and Development.

Australian technical experts are also working on the ground providing logistical and communication support to the response and relief efforts of the Philippine government and UN partners.

Several Australian NGOs are also actively involved in relief efforts with expected total contribution valued at $5 million.

The Finnish Red Cross also send relief shipment to the Philippines including some 4,000 mosquito nets, 4,000 buckets and 2,300 water canisters which was loaded onto a Manila-bound Emirates cargo airplane in Tampere on Thursday.

The Finnish Red Cross purchased the supplies with money donated to its catastrophe fund. The agency has to date donated 50,000 euros to the Philippines, bringing the total value of Finnish Red Cross aid up to 100,000 euros.

Pagadian Airport Re-opens

Boast wider and extended runways

October 9, 2009

Pagadian City - The expanded Pagadian airport re-opens today to the public with no less than President Gloria Macapagal-Arroyo gracing the inauguration the newly expanded airport.

The P309.46-million airport development project started in 2006 and calls for the repair, widening and extension of the airports runway with shoulder and grade correction as well as expansion of the airports apron to accommodate two ramps for narrow-body jets like Airbus 319/320 used by major airlines in the country, and was completed in September 2009.

The first jet that touched down the newly repaired runway was Fokker 70 of the Philippine Air Force carrying PSG troops followed by Dornier 328 of the Royal Star Aviation, registration RP-C8328 chartered to carry the PMS entourage of the President. The last jet that landed for the inauguration was the Presidential jet owned by San Miguel Corporation, with registration RP-C8576 chartered by the Office of the President to carry Gloria Arroyo.

A new 3 storey control tower is also in the works to be completed early next year to compliment navigational services of the airport which is scheduled to open for commercial traffic in November 2009 with Philippine Airlines and Cebu Pacific lining up services for Manila and Cebu.

Zest Air is also planning to relaunch its service to the airport from Manila. Airline schedule has yet to be announced from the respective airline companies.

Decoding PAL Labor Woes

Déjà Vu?

Special Report
October 8, 2009


The Philippine Supreme Court decision in the case Flight Attendants and Stewards Association of the Philippines (FASAP) vs. Philippine Airlines Inc.(PAL) will have far ranging implications to the airline's finances even if the case covers only 1,400 FASAP members because in reality the decision will benefit 5,000 employees that were illegally retrenched by the airline in 1998.

The court, in ruling with finality, declared that there was no compelling reason submitted by PAL to changed its July 22, 2008 decision that decreed Philippine Airlines (PAL) guilty of illegal dismissal and consequently ordered to reinstate or pay the backwages and separation benefits of FASAP members whose total monetary award is estimated at about P2.3 billion.

What really happened?

Philippine Airlines, Inc. (PAL) employed close to 8,000 employees before it adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the 1997 Asian financial crisis. In the fiscal year that ended on March 31, the company had a loss of $184 million based on its financial report. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion.

On June 15, 1998, PAL decided to retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel belonging to the Flight Attendants and Stewards Association of the Philippines (FASAP), to take effect on July 15, 1998.

In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14" whereby PAL's fleet of aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel. PAL admits that the retrenchment is wholly premised upon such reduction in fleet, and to "the strike staged by PAL pilots since this action also translated into a reduction of flights." PAL claims that the scheme resulted in "savings x x x amounting to approximately P24 million per month - savings that would greatly alleviate PAL's financial crisis."

Before PAL decided to retrenched its cabin crews on June 15, a series of consultations and meetings were conducted between FASAP and PAL to explored all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme would be implemented.

Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the PAL-FASAP Collective Bargaining Agreement (CBA) in retrenching cabin crew personnel, that is, that retrenchment shall be based on the individual employee's efficiency rating and seniority.

PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin crew member's overall performance for the year 1997 alone. Their respective performance during previous years with PAL was not considered. The factors taken into account on whether the cabin crew member would be retrenched, demoted or retained were: 1) the existence of excess sick leaves; 2) the crew member's being physically overweight; 3) seniority; and 4) previous suspensions or warnings imposed.

In the meantime, PAL began implementing its retrenchment program by initially terminating the services of 140 probationary cabin attendants. They were subsequently rehired in April of 1998. Moreover, their employment status was made permanent and regular.

What caused the Cessation of Operation?
In June of 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was approved by the Securities and Exchange Commission (SEC) on June 23, 1998 under SEC Case No. 06-98-6004.

On September 4, 1998, Lucio Tan made an offer to transfer shares of stock to its employees and three seats in its Board of Directors, on the condition that all the existing Collective Bargaining Agreements (CBAs) with its employees would be suspended for 10 years, but it was rejected by the employees. Philippine Airlines Employees Association (PALEA) voted 1,371 to 1,055 to reject the offer to swap a 10-year suspension of collective bargaining rights for a 20% stake in the airline.

On September 17, 1998, PAL informed its employees that it was shutting down its operations effective September 23, 1998 despite the previous SEC approval of its rehabilitation plan.

On September 23, 1998, PAL ceased its operations and sent notices of termination to all its employees.

On September 25, 1998, Philippine Airlines Employees Association (PALEA) board, sought the intervention of then President Joseph E. Estrada on its proposed counter-offer which includes a 10-year moratorium on strikes, waiver of some of the economic benefits in the existing CBA as well as a 20% stake at the airline. But Lucio Tan rejected this counter-offer as being unreasonable.

On September 27, 1998, the PALEA board amended the terms and wrote President Estrada for intercession on their proposal the following terms and conditions, subject to ratification by the general membership:

1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00, from Mr. Lucio Tan's shareholdings, with three (3) seats in the PAL Board and an additional seat from government shares as indicated by His Excellency;

2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in committees or bodies which deal with matters affecting terms and conditions of employment;

3. To enhance and strengthen labor-management relations, the existing Labor-Management Coordinating Council shall be reorganized and revitalized, with adequate representation from both PAL management and PALEA;

4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided the following safeguards are in place:

1. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground employees of the Company;

2. The `union shop/maintenance of membership' provision under the PAL-PALEA CBA shall be respected.

3. No salary deduction, with full medical benefits.

5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and between PAL and PALEA, to those employees who may opt to retire or be separated from the company.

6. PALEA members who have been retrenched but have not received separation benefits shall be granted priority in the hiring/rehiring of employees.

7. In the absence of applicable Company rule or regulation, the provisions of the Labor Code shall apply.

In a referendum conducted on October 2, 1998, PALEA members ratified the above proposal and Tan agreed to a share swap deal.

On October 7, 1998, PAL resumed 12 domestic destinations and, two months after, 10 international flights were re-launched.

On November 1998, PAL began recalling to service those it had previously retrenched. To date, PAL claims to have recalled 820 of the retrenched cabin crew personnel. FASAP, however, claims that only 80 were recalled as of January 2001.

In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by which it undertook a recovery on its own while keeping its options open for the entry of a strategic partner in the future. Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposed revised business and financial restructuring plan, which required the infusion of US$200 million in new equity into the airline.

On May 17, 1999, the SEC approved the proposed "Amended and Restated Rehabilitation Plan" of PAL and appointed a permanent rehabilitation receiver for the latter.

On June 7, 1999, the SEC issued an Order confirming its approval of the "Amended and Restated Rehabilitation Plan" of PAL with the cash infusion of US$200 million made by Lucio Tan on June 4, 1999.

What does the law say?
Under the Labor Code, retrenchment or reduction of employees is authorized as follows:
ART. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof.

In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

According to the Supreme Court, the law recognizes the right of PAL to reduce its work force if the same is made necessary by compelling economic factors such as the Asian financial crisis which would endanger its existence or stability. Where appropriate and where conditions are in accord with law and jurisprudence, the Court has authorized valid reductions in the work force to forestall business losses.

While exercise of this right is a management prerogative, there must be faithful compliance with substantive and procedural requirements.

The first requirement is that the employer should prove economic or business losses with sufficient supporting evidence.Its failure to prove these reverses or losses necessarily means that the employee's dismissal was not justified.

For Business losses, Any claim of actual or potential losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal. These are:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer; (2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment; (3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half (½) month pay for every year of service, whichever is higher; (4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees' right to security of tenure; and, (5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.

It simply meant that not every loss incurred or expected to be incurred by a company will justify retrenchment. The fact that an employer may have sustained a net loss for the year may not amount to serious business losses mentioned in the law.

The employer must show that its losses increased through a period of time and that the condition of the company will not likely improve in the near future.

Retrenchment should and only be a measure of last resort.The employer must also exhaust all other means to avoid further losses without retrenching its employees.

What went wrong?

PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.

Records show that PAL was not even aware of its actual financial position when it implemented its retrenchment program. It initially decided to cut its fleet size to only 14 ("Plan 14") and based on said plan, it retrenched more than 1,400 of its cabin crew personnel. Later on, however, it abandoned its "Plan 14" and decided to retain 22 units of aircraft ("Plan 22"). Unfortunately, it has retrenched more than what was necessary.

The 2.3 Billion mistake?

To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present the same with the Labor Arbiter. The fact that PAL was placed under receivership did not excuse it from submitting to the labor authorities copies of its audited financial statements to prove the urgency, necessity and extent, of its retrenchment program. PAL should have presented its audited financial statements for the years immediately preceding and during which the retrenchment was carried out.

When PAL implemented Plan 22, instead of Plan 14, which was what it had originally made known to its employees, it could not be said that it acted in a manner compatible with good faith. It offered no satisfactory explanation why it abandoned Plan 14.

Instead, it justified its actions of subsequently recalling to duty retrenched employees by making it appear that it was a show of good faith; that it was due to its good corporate nature that the decision to consider recalling employees was made.

Why was PAL Guilty of Illegal Dismissal?

The truth, however, is that it was unfair for PAL to have made such a move; it was capricious and arbitrary, considering that several thousand employees who had long been working for PAL had lost their jobs, only to be recalled but assigned to lower positions (i.e., demoted), and, worse, some as new hires, without due regard for their long years of service with the airline.

The irregularity of PAL's implementation of Plan 14 becomes more apparent when it rehired 140 probationary cabin attendants whose services it had previously terminated, and yet proceeded to terminate the services of its permanent cabin crew personnel.

Will the airline make the same mistake again?
The 1998 retrenchment of PAL employees including the flight attendants was caused primarily by dwindling passenger traffic and currency devaluation brought by the Asian financial crisis. Yet the employees never understood the severity of financial trouble their employer was all because PAL cannot determined with certainty how much it lost in the first place.

In 2009 , PAL is again reducing headcount to cut costs. The airline is offering early retirement packages to its employees until end-October as it plans to reduce its 8,000-strong workforce by at much as 10% this year. Presently, manpower accounts for 18% of the company's total expenses.

"We are currently reviewing our entire organizational set-up. We want to make PAL lean and mean so it will be agile and flexible enough to adapt to the new economic climate," PAL Holdings President Jaime Bautista previously told reporters during its recent annual stockholders meeting.

In a notice sent to the PAL union early this month, Bautista said services to be initially outsourced on November include catering, passenger handling, ramp handling, and cargo-handling operations to prevent the company from incurring further losses.

"We now have lower capacity, so we need to reduce manpower," Bautista added with the hope that they comply all the conditions that the law require this time around.

But that would be another story should they err again.

Navtech powers 5J Flight Planning

October 7, 2009

Ontario - Philippine carrier Cebu Pacific Air has signed a deal with Canada-based Navtech Inc., a global leader in flight operations software and tool services to provide the airline with flight planning software already used by more than 350 airline and aviation services organizations.

Navtech Flight Plan (NFP) features a number of optimization tools, including cost indexing and least cost route calculations that will allow Cebu Pacific to maintain the most efficient daily routes and optimized flight plans.

"Navtech combined Cebu Pacific's mixed fleets onto a single platform, enabling our new mapping technologies and online filing functionality to support their dispatchers," said Mike Hulley, Navtech CEO.

"It's an example of the way we adapt our services to support the individual needs of our customers. Because we work so closely with them, we're able to be more efficient in what we deliver. Ultimately, we tailor a highly-customized product at a very competitive price."

"The software will help Cebu Pacific's pilots construct routes with an eye to minimizing fuel consumption", says Candice Iyog, the airline's VP for Marketing and Distribution.

"Using this world class technology helps us to save on fuel and other operating costs, which we continue to pass on, in the form of lower fares, to our passengers." Iyog said.

The airline's pilots will use NFP's updated, browser-based GUI to take advantage of Navtech's dynamic route construction functionality and optimized fuel burns routines. Navtech's worldwide route construction functionality paired with integrated NOTAMS, graphics and textual weather will aid Cebu Pacific and other airlines in producing more efficient and optimized routes. Also, Navtech's fuel burn calculations feature newly developed algorithms and create significant optimizations for fight time and fuel consumption.

Cebu Pacific is the third-largest low-cost carrier in Asia, flying to 14 key international destinations in the ASEAN region. It has a current fleet of 21 Airbus and 8 ATR72-500 aircraft, and expects delivery of more aircraft through 2014.

Omni Aviation Expands

beefs up trainer fleets

October 5, 2009

MANILA, Philippines - Omni Aviation, the country’s leading flying school, has added four new aircraft to its fleet of training airplanes. One of these airplanes is a Cessna 152 Aerobat, an aircraft capable of performing various aerobatic maneuvers.

Capt. Ben Hur Gomez, president and chairman of Omni Aviation Corp., said they now have 22 airplanes consisting of 16 Cessna 152s, five Cessna 172s and one twin engine Piper Seneca.

The acquisition of the Aerobat bolsters Omni’s reputation as the Philippines’ premier source of safe, reliable, and well-trained pilots. “The Aerobat provides students advanced training in upset (unusual attitudes) recovery, along with stall and spin recognition and avoidance,” he said.

“The Aerobat trains students to maintain control of the aircraft in conditions of unexpected severe turbulence. In this situation, an aircraft can be tossed around or even flipped upside down. Omni Aviation now has the capability to train its students to analyze and make correct decisions in order to return to safe normal flight,” he added.

Capt. Gomez founded Omni Aviation in 1994, right after his retirement from Philippine Airlines (PAL). He served with PAL for 38 years and capped his career as vice president of safety and security. He ended his career as a Captain of a Boeing 747 with more than 33,000 hours of flight experience without a single accident. His experience and reputation has made Omni Aviation what it is today – an honest company.

Amadeus powers Zest Air

October 5, 2009

Zest Air partners with Amadeus. From left: Albert Villadolid, General Manager Amadeus Philippines; Paul Martin, Director - Airline Business Group Amadeus Southeast Asia and India; Ambassador Alfredo Yao, Zest Airways President and CEO; and Capt. Eliseo Tabora, Zest Airways Executive Vice President and COO. Looking on are (from left) Arturo Alejandrino, Zest Airways Director; Meg Obejas, Zest Airways Manager - Reservations and Ticketing; Cherrie Asuncion, Account Manager Amadeus Airline Business Group; Leveric Ng, Zest Airways VP - Marketing.

Wider customer reach paves the way for Zest Air's expansion into Asia

Amadeus, a leading global technology partner to the travel and tourism industry, today announced a deal with Zest Air, a leading domestic carrier in the Philippines, to distribute its flights on Amadeus' world-leading Global Distribution System (GDS).

Travellers will now be able to pre-book flights to destinations across the Philippines from more than 100,000 travel agencies worldwide. This will save them the inconvenience of having to book domestic flight tickets after arrival in the country. The broadened distribution will also help support Zest Air as the carrier prepares to move beyond the Philippines to cover key destinations in Asia.

Paul Martin, Director of South East Asia and the India Subcontinent in Amadeus Asia Pacific's Airline Business Group, said, "This is a landmark deal for Zest Air as it enters a period of exciting growth. By distributing its flights on Amadeus' GDS, Zest Air will significantly widen its customer base to reach a critical mass that is vital to its regional expansion."

"The Philippines is growing in popularity as a global tourism destination, and Amadeus is correspondingly increasing its support to travel providers in the country. We are thrilled to have been chosen by one of the Philippines' leading domestic carriers to drive bookings on its routes in the country, and following that, in Asia," he added.

Zest Air plans to widen its route network to include cities in China, Hong Kong, Japan, Macau, Malaysia and South Korea.

Ambassador Alfredo Yao, Zest Air's President and CEO, said, "Since its inception in 2008, Zest Air has successfully fused creativity and modernity with excellent service, and this has resulted in our airline's strong growth. We have selected Amadeus as our distribution partner because it understands the needs of fast-growing airlines like Zest Air and exhibits the same qualities of innovation and customised service that we value."

"Distribution through Amadeus will not only establish Zest Air as a global player, it will also provide our customers with enhanced convenience and accessibility to our flights. We intend to leverage Amadeus' industry expertise to support our strategic development, and hope to strengthen our relationship in the coming years."

A young brand in the aviation industry, Zest Air operates seven aircraft and flies to 20 destinations around the Philippines. - etravelblackboardasia.

Bacolod-Based Aviation school Expands

plans P123-million expansion

October 3, 2009

Filipino-American joint venture Aeronavigation Academy International Philippines Inc. is expanding its existing aviation training institution in Silay City, Negros Occidental with a project cost of P123 million.

The training institute is certified by the Civil Aviation Authority of the Philippines (CAAP) of the Department of Transportation and Communications as a pilot school on May 28, 2009 with a validity of up to May 26, 2010. The certification is renewed annually.

The P123 million investments would be used to acquire 17 new airplanes five of which have already arrived to augment its existing two airplanes.

The company will also purchase new aircraft simulator, aircraft fuel trucks, transportation vehicles, and other related equipment.

At the same time, it would also construct additional aviation facilities such as hangars and training/administration complex.

The company’s curriculum follows the existing guidelines by CAAP. Its training courses are being administered by Qualified Flying Instructors (FIs) and Ground Instructors (GIs) to ensure quality standards and safety. In some of these course, students will receive a set of training materials as well as laptops.

The company is 30 percent owned by American firm Aviation Holdings International LL and 70 percent Filipino investors Uldarico Raul Galeste, Jaime Vergara, Rodolfo Vergara, Cesar Poe, and Amado Marking.

Leadership by Example

Tycoon's son to get the first Pink Slip out of PAL!

October 1, 2009

If sending a pink slip to one of the airline's Executive is an indication of how deep the financial problem of Philippine Airlines was, nothing can be more pronounced than sending the son of the Philippines wealthiest man out of the company he owns.

Perhaps it is the most compelling evidence of supreme sacrifice like the fabled story of the new testament, in that Lucio Tan so loved PAL that he fired his son out of the airline to help it weather the crisis that plagued any other legacy carrier worldwide, as it struggles to stay afloat amidst period of uncertainty in the international aviation industry.

At yesterday’s stockholders’ meeting of PAL parent PAL Holdings Inc., the management headed by President Jaime Bautista accepted the younger Tan's offer to include his position to the purging block and give Mr. Bautista a "free hand” in restructuring the airline to a more competitive position to survive.

John Tan holds two concurrent Vice-Presidential post within the airline, first as VP for Operations and network management and second as VP for Technical Services Department. He joined other VP's and Managers who availed themselves of PAL’s early retirement program. An early retirement plan is being offered by the company to all its employees with an October 31 deadline.

The young Tan is the highest official from the airline to go together with almost 4,000 rank and file workers from its non-core businesses such as ground operations that includes ramp, passenger and cargo handling as well as catering in a bid to further trim costs, says Jaime Bautista during the same meeting.

According to Bautista the airline has decided to outsource some services to cut cost and they are also reducing services to some international destinations. "The situation we are facing is very serious..." said Bautista adding that initiatives has to be implemented "to further reduce costs and also increase revenues."

Already, the airline has shed seven percent of its workforce because of the reduction in capacity by seven percent. Flight capacities for US, Canada and Australia have already been cut by five to seven percent, Bautista said.

And because of the reduction in capacity, there is a need to reduce manpower. PAL has asked its employees’ unions to avail of the early retirement, after which rationalization of manpower will follow.

The airline has also tapped new traffic schemes and introduced new redeployment plans for under-performing flight frequencies onto other routes. It is also deferring all non-essential capital spending, suspended all non-essential programs, and cut fixed operating expenses. But they are completing the final stages of the $50-million refurbishment program of its current fleet of B744s.

Bautista also announced that they are eyeing new destinations either through charters or regular scheduled operations in Europe or the Middle East but doesn't disclosed exactly where they will head next. Additional frequencies were however revealed. "The slowing demand from our traditional markets like Japan, Korea and the United States because of the recession is making us rethink our revenue generating strategies. We would be increasing the frequency to some of our service areas like Kalibo and China," said Mr. Bautista. Kalibo for example would have an increase to seven flights a day from the previous five.

The only good news there is that while PAL’s international passenger traffic is down, its domestic passenger volume has increased. “Domestic traffic has not been very much affected and this we attribute to the efforts of the Tourism department to improve tourist arrivals to the country,” he pointed out. However, the international passenger traffic accounts for about 65-70 percent of PAL's total revenues.

He said that while revenues are expected to be down for the current fiscal year and the airline is projecting to realize a loss, passenger traffic for the combined international and domestic businesses is expected to slightly increase from last year’s 8.95 million passengers to around nine million.

Bautista said further that the company is now "in the second quarter of what appears to be an extremely difficult year... This current fiscal year still shows no signs of recovery," he adds.