Loss making national carrier Philippine Airlines said Thursday it had sent termination notices to about 2,600 ground crew as part of its long-term survival plan.

Airline president Jaime Bautista said the workers were told their jobs would officially cease on September 30, in a move that that will see the carrier save up to 15 million dollars in annual operating costs.

"The spinoff/outsourcing is a painful but necessary decision to ensure PAL's viability and long-term survival," Bautista said in a statement.

"We assure affected workers that they will all receive their separation pay and other benefits that are at par, if not better, than industry standards."

The mass termination was backed by President Benigno Aquino earlier this year, and gives PAL a free hand to contract out its in-flight catering, airport services and call centre reservations to other companies, to cut costs.

PAL, Asia's oldest airline, said early this month it suffered a net loss of $10.6 million for the three months to June.

The airline had posted a $31.6 million profit in the same period last year, on the way to $72.5 million profit in the 12 months to March, which was a turnaround from a $14.4 million loss in the previous fiscal year.

Bautista said the firm would spend 2.5 billion pesos (59.5 million dollars) on the severance package for the affected workers and a one-year extension of medical benefits.

The outsourcing programme was the main component of PAL's survival blueprint which was launched last year after the airline incurred losses of 312 million dollars in the 2008-2009 fiscal year.

PAL blamed unstable fuel prices, the devastating tsunami in Japan and conflicts in key markets in the Middle East and North Africa as factors that led to the poor fiscal showing.

It said it also continues to suffer from being blacklisted by the European Union over safety concerns and because of stiff competition.

Bautista said the sacked workers were guaranteed contractual jobs at any of the new service providers. But the workers said this went against fair labour practices.

"The presumption is that when you accept the offer to work with the third-party provider, you start from the bottom, with no security of tenure and a salary that will not give you a good quality of life," union leader Gerry Rivera told AFP.

PAL Employees Association (PALEA) will seek an injunction against the management's decision from the courts on Friday, he said.

"And if PAL forces the issue, we will meet them with resistance. We will have no other recourse but to fight back and paralyse its operations," he added.

The planned union strike would be the latest labour-related setback for PAL, which was founded in 1941.

It is also locked in a dispute with its 1,600 ground crew, who are demanding higher wages and a lifting of a company policy that forces female attendants to retire at 40.

Last year, 25 pilots and first officers on the airline's short-haul aircraft quite for higher paying jobs abroad, forcing cancellation of flights.

Tweet

Related Links Aerospace News at SpaceMart.com