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Philippine Leader Issues Plea for Airline

Asia: Union members have been offered stake in national carrier, which may shut down this week.

September 21, 1998|From Reuters

Philippine President Joseph Estrada during the weekend appealed to the labor unions of Philippine Airlines Inc., Asia's oldest national carrier, to reconsider their position in hopes of averting its closure.

Citing enormous losses and protracted labor conflicts, the 57-year-old airline announced Thursday it will suspend operations at midnight Wednesday.

PAL would be one of the biggest companies fold because of Asia's ongoing financial turbulence. Among its routes is daily service between Los Angeles and Manila.

"I am appealing to the union because the closure will affect not only themselves but the whole country as well," Estrada said in a statement.

He said he had hoped an ownership-sharing plan proposed by PAL Chairman Lucio Tan could have been the start of talks between labor and management.

PAL decided to finally close after its ground crew union reversed its earlier acceptance of management's offer for employees to own 20% of the airline in exchange for a 10-year suspension of labor bargaining.

The unions said this was unconstitutional since they would be giving up their right to labor unionism.

The assurance of industrial peace was a condition set by PAL's creditors and potential investors before they would agree to a rehabilitation program.

PAL was brought to its knees after a 22-day pilots' strike paralyzed its operations in June, forcing it to seek a moratorium for its $2-billion debt.

Estrada said the shutdown of PAL would adversely affect employment, domestic trade and other parts of the economy.

"Not only PAL employees but also small-time workers in various other sectors, like cut-flower vendors and waiters of hotels would be thrown out of jobs by the airline's closure," the statement said.

"What's the use of having collective bargaining agreements if the company does not operate any more?" Estrada said.

He said Tan did not meet him Friday but said he was still hopeful of finding an amicable settlement.

PAL's impending closure comes at a time when another airline, Air Philippines Corp., was suspended by government for failure to comply with safety requirements. This leaves the country with limited service on domestic routes.

On Friday, PAL officials said they were preparing to close. "We have informed our major creditors the plan to close the airline on September 23, and if that happens most of the creditors will take [our] airplanes," said PAL Chief Finance Officer Jaime Bautista.

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