PAL to focus on returning to profitability
The Philippine Airlines (PAL) will focus on returning to profitability after the planned spin-off of its three non-core business units was allowed by the Department of Labor and Employment.
Cielo Villaluna, PAL spokesperson, said with the decision of DOLE, the airline would now implement its restructuring program.
Earlier, DOLE affirmed the previous order of then Acting Labor Secretary Romeo Lagman by saying that PAL’s decision to spin off three non-core units was “just, reasonable, human and lawful exercise...”
The affected units are in-flight catering services, airport services (including ground handling, cargo terminal/cargo handling, and ramp handling) and call center reservations, which estimated to reach 2,600 staff.
Villaluna said the planned spin-off was done in good faith and justified by management’s prerogative to reorganize its corporate structure for the viability of its operations.
“Most airlines in the world, and almost all carriers in Asia, are now using third parties to supply and render non-core services. In PAL’s case, it is implementing the spin-off to cut costs and ensure the airline’s continued survival,” she said.
The company expects to save about P500 million to P1 billion a year with the spin-off of its three non-core businesses.
Unlike State-owned airlines that enjoy subsidies and bailouts in times of difficulty, Villaluna said PAL is entirely on its own.
“As a purely private enterprise, PAL receives no financial assistance – not even concessional loans from the Philippine government,” she said.
Jaime Bautista, PAL president, earlier said that the reduction of PAL’s workforce was part of the company’s plan to become more attractive to investors.
The talks with possible investors, however, were put on hold because of the labor dispute.
PAL earlier increased its authorized capital stock from P16 billion to P20 billion, divided into 100 billion shares in preparation for the entry of new investors.
Bautista had said that the outlook for PAL this year was to be profitable after posting a $14.4 million net loss for its fiscal year ending March 2010.
In the first quarter ending June, PAL recorded a net profit of $31.6 million, lower by 11 percent compared to the same period last year.
The airline’s revenues went up by 30 percent to $426.7 million for the first quarter of its fiscal year 2010 to 2011 over the same period of $327.7 million.* PNA
