Sep 13, 2010

PAL labor issues scaring investors away — official

The numerous labor issues hounding the Lucio Tan-led Philippine Airlines (PAL) have scared away potential investors from bailing out the cash-strapped flag carrier.

According to Jaime J. Bautista, PAL president and chief operating officer, potential investors have asked the airline to resolve its several labor issues before discussions about infusing fresh funds into the airline can resume.

“Investors’ appetite has decreased due to the company’s labor problems," Bautista told reporters at the sidelines of the company’s stockholders’ meeting on Thursday.

He said the company has not been in contact with its potential investors for the past few months.

PAL on Thursday approved the restructuring of its equity by reducing the par value of its shares to 20 centavos from 80 centavos, which will make it easier for outside investors to get a bigger voting block in PAL.

Potential investors in PAL were reported to be Middle Eastern groups and companies in the Asia Pacific region that are also involved in airline operations.

“We want new money to come in because if [PAL chairman Lucio Tan] simply sells his shares, then the money will go to him and not to the company," Bautista said.

PAL has been in search of investors since last year, after suffering over $300 million in losses due to high oil prices and low demand.

“There are investors that want to be passive but we are also willing to get investors that wish to have a more active role," Bautista said.

Among PAL’s many labor issues is the opposition to the company’s plans to outsource non-core services like in-flight catering, airport services and call centers, retrenching over 2,600 workers in the process.

PAL’s flight attendants are also protesting a policy that requires them to retire at the age of 40. All other PAL employees are allowed to work until they are 65.

Bautista said these labor issues have also affected bookings, with many passengers growing weary of a potential labor strike.

Bautista denied that the company approached the groups of San Miguel Corp. president Ramon S. Ang and Philippine Long Distance Telephone Co. chairman Manuel V. Pangilinan, inviting them to invest in PAL.

Flights to India

PAL is increasing its flights to India by the first quarter of next year, as it confronts challenges from is labor force and the country's tourism sector.

By March of next year, the airline will mount three direct flights a week to India's main airport in New Delhi, said PAL president Jaime Bautista on Thursday.

"There are a lot of Indian nationals here in the Philippines," he told reporters.

Bautista said PAL will use its wide-body Airbus A330 aircraft for its flight to India, making PAL the only local carrier that serves routes to the sub-continent.

He said international carriers once found it hard to compete against Middle Eastern airlines, which get their fuel at a discount, allowing them to offer cheaper fare rates.

PAL introduced new flights to Brisbane, Australia earlier this year. It already flies to Sydney and Melbourne.

Also, the airline has introduced new flights to Riyadh, Saudi Arabia, making PAL the only local company that serves Middle Eastern routes.

"Another opportunity for us is to get the market of Indian nationals that want to go the North America," Bautista said, adding that it may opt to increase its flights to seven days a week if the demand is enough.

PAL earlier wanted to expand its flights to the US. But because of the country's poor regulatory environment, the Federal Aviation Administration has banned Philippine carriers from expanding there.

Passengers, said Bautista, can stopover in the Philippines and take connecting flights to Los Angeles, San Francisco and Las Vegas in the US or to Vancouver in Canada. —With Paul de Leon/JE/KBK/VS, GMANews.TV

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