MANILA – Like the other world airlines plagued by the worsening global recession, the country’s flag carrier, Philippine Airlines (PAL), announced it is now taking “extraordinary and decisive measures†like reducing its workforce and similar steps to enable it to survive.
Through a spokesman, PAL said that because of the lingering global financial crisis that discouraged air travel, the company sustained a $304.4 million loss for the fiscal year that ended on March 31, 2009.
In order to survive, the spokesman said that aside from rationalizing its workforce, meaning laying off personnel, Pal is also taking other measures such as realigning operations and other cost-cutting steps.
But the spokesman did not say how many of PAL’s total workforce would be affected by the planned layoff.
The tone was set by Jaime Bautista, PAL president and chief operating officer, who told the company’s annual stockholders meeting on Thursday: “Extraordinary times call for extraordinary measures.â€
Bautista admitted that PAL is in dire financial straits and shares the same predicament that has plagued even the world’s giant airlines because of the slowdown in passenger traffic due to the global financial and economic slump.
In this light, Bautista said the company is now reviewing the entire organizational setup with the aim of making the company lean and mean so it can adjust to the new economic climate.
“Clearly, the crisis has changed the face of the airline industry, which is among the sectors hardest hit by the recession,†Bautista emphasized.
As a purely private enterprise, he said PAL relies on the strength and backing of its principal stockholders, unlike the state-owned airlines which enjoy support from their governments, especially in times of crisis.
In the case of the planned layoff of workers, Bautista assured that management would offer attractive early retirement packages as a means of enhancing productivity and reducing operational expenses.
Bautista also assured that the cost-cutting measures it is taking would not infringe on PAL’s compliance with international aviation safety standards.
PAL’s annual report showed an increase in revenues to $1.63 billon from the fiscal year ending in March 31, 2009 from $1,5 billion in the previous year after carrying 17 percent more passengers due to acquisition of additional aircraft and growth in the Philippine domestic market.
However, the report said the cost of operating more flights which involved higher maintenance expenses and compounded by the record high fuel prices raised expenses to $1.9 billion from $1.54 billion the previous year.
Fuel comprised 44 percent of PAL’s operating expenses, the report emphasized.
When the global crisis led to a travel slump in the latter part of the year, the report said PAL’s passenger load factor fell to an average of 76.2 percent, or three points lower than the previous year.
The report added PAL also started paying $165.4 million in principal and interest to its creditors, bringing to $2.4 billion the total paid from March 1999 to March 2009. Total assets decreased by $60.6 million to $1.79 billion while total liabilities rose by $239.5 million over the previous year.
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