THE labor department has upheld the spin-off and outsourcing plan of Philippine Airlines (PAL), saying this was a “valid exercise of managerial prerogative” and was “reasonably necessary” considering the continuing losses sustained by the flag carrier.
Acting Labor Secretary Romeo C. Lagman in a 32-page decision last week said the plan to transfer three of the airline’s non-core units to third-party service providers is “based on lawful ground and all in a valid exercise of managerial prerogative and as such is valid and lawful in all respects.”
The spinoff will affect about 3,000 employees in inflight catering services; airport services, including ground handling, cargo terminal/cargo handling and ramp handling; and call center reservations.
PAL is offering affected workers separation pay equivalent to one month’s salary for every year of service.
“We are glad that the company has prevailed upon the service providers to initially hire the workers who would be separated by the closure of In-Flight Catering Operations, the Airport Service Operations and the Call Center Reservations Operations. However, the hiring of these workers shall be subject to the qualification, terms and conditions laid down respectively by the service providers for admission to employment,” DOLE said in its order.
PAL welcomed the labor decision, noting it recognizes the spinoff as a strategy to deal with financial woes.
“With the DOLE decision, PAL must now focus on the tough challenge of surviving the crisis and competing amid a difficult operating environment. To do this, PAL must implement various revenue enhancement and cost-control initiatives that includes outsourcing,” the airline said in a statement.
