Philippine Airlines set to fly again

The Department of Labor said the final results of the two-day referendum showed 3,254 union members voted for and 1,794 voted against management’s offer of 20 per cent equity in the airline in return for a 10-year freeze on labour haggling. "There was a good turnout. It was peaceful, orderly and many participated in the referendum," labour secretary BienvenidoLaguesma told reporters.

The PAL Employees Association (PALEA), the airline’s biggest union comprising more than 6,000 workers, had rejected the management offer last week but president Joseph Estrada persuaded the workers to hold another vote, saying the closure of the airline would worsen the country’s economic problems.

PAL said it will prepare shortly to resume flights on 14 domestic routes using 13 aircraft next Wednesday. Zapanta said PAL will open its ticket offices at the Manila domestic airport on Saturday and would mobilise its people to prepare the firm’s ground equipment, offices and warehouses.

PAL, with debts of over $2.0 billion, shut down on September 23 due to enormous losses and a protracted labour dispute.

The closure of PAL forced the government to enter into a temporary lease agreement with Hong Kong’ Cathay Pacific Airways Ltd to fly domestic routes this week to keep air travel in the country moving. But it is not expected to be clear skies for PAL even after it rises from theashes.

Analysts said PAL would need to restructure its costly operations and weak revenue base to enable it to face stiffer competition and a shrinking market. Given its financial constraints the airline may also ask for concessions from the government on the operations of unprofitable domestic routes, Jojo Gonzales, Chief strategist of Merrill Lynch Securities (Phils) Inc, said this week.

"PAL should take this as an opportunity to restructure. What might have been frustrating to its owners when it was privatised is that it has not been able to cut staff as much, or restructure as much," Gonzales said.

Before its closure, PAL had a work force of 8,617, down from 15,000 prior to a crippling pilots’ strike in June that finally brought the airline to its knees. Management and labour leaders have agreed to slash the airline’s staff to 5,000 when it re-opens next week. Airline officials have said further cuts were likely.

A restructuring of $2.0 billion loans is also necessary to get the airline off theground. Government officials said four foreign airlines had expressed interest in taking a stake in PAL, including Cathay Pacific, Northwest Airlines Corp and Singapore Airlines. EVA Airways of Taiwan was also interested but only in assuming PAL’s international operations.

A PAL official said the airline would fly only domestic routes immediately after re-opening and in lower frequencies than before and international flights could resume only after two to three months.