Turning PAL around

Editorial

Philippine Daily Inquirer

8:23 pm | Monday, April 16th, 2012

The colorful history of Philippine Airlines took another major turn just before the Lenten break. San Miguel Corp., led by the aggressive 58-year-old businessman Ramon Ang, bought a 40-percent stake in, and obtained management control of, the airline.

PAL, Asia’s first airline, was a source of national pride in the 1960s, until the global crisis in the 1970s and government mismanagement clipped its wings. Hopes that it would again fly the skies profitably were revived when it was sold to taipan Lucio Tan in the 1990s. But a series of economic crises and protracted disputes with labor unions shackled PAL once again.

Will Ang succeed in turning the ailing airline around this time?

Gauging from San Miguel’s acquisition moves in the past few years, Ang has expertise in taking advantage of synergies among the companies under his supervision. And PAL seems a perfect fit to the group. San Miguel owns Petron Corp., which can help the airline with its fuel requirements. (Aviation fuel makes up half of PAL’s operating costs.) PAL can also benefit from Petron’s network of fuel storage facilities like depots and logistics systems nationwide.

San Miguel has ventured into infrastructure and now owns the Caticlan airport, the gateway to the world-famous Boracay Island. There are plans to expand the airport so it can accommodate international flights and boost tourist traffic. As a San-Miguel-owned firm, PAL will benefit tremendously from this expansion, as it likewise will from San Miguel’s participation in the Aquino administration’s Public-Private Partnership program to redevelop the Ninoy Aquino International Airport in Pasay City and the Clark International Airport north of Manila.

With the San Miguel group having about 17,000 employees, it can only be expected that they, as well as its executives, will patronize PAL as they do other San Miguel products like beer. Add to this potential market the vast clientele of San Miguel who just might be enticed to use the airline as well.

And speaking of synergies, there is also a plan to integrate PAL’s popular Mabuhay Miles loyalty program with similar programs of San Miguel companies such as Petron. The case of Bank of Commerce is a testament to the benefits of such synergy. The erstwhile banking arm of San Miguel is expanding its network by simply putting ATMs in major Petron stations. Those gas stations already carry products from San Miguel’s traditional food and beverage units; some even offer broadband Internet subscriptions to another San Miguel subsidiary, Wi-Tribe Philippines. The list goes on, with San Miguel having interests in real estate, telecommunications, mining, power and infrastructure. What can this cross-selling scheme do for PAL but work wonders?

Ang is not exactly new to the airline industry. Few know it, but the CEO of the country’s biggest conglomerate is a licensed pilot. In an earlier conversation with members of Inquirer Business, Ang cited just one measure that could boost efficiency at the airline. “I want all PAL aircraft to have software that will monitor how well pilots fly the planes,” he said. This monitoring software will help determine how faithfully pilots follow prescribed power settings at different stages of a flight—much like moderating the pressure on a car’s accelerator, instead of constantly revving it up. “How well the pilots fly the plane and how efficient they operate it will have a direct bearing on their pay,” Ang said. “You can bet you’ll see improved profitability there.”

Yes, PAL faces sunny skies with the entry of a new investor—and not just an ordinary investor, but one that has displayed a particular acumen in making companies better, organizationally and financially.

The only sticky point that can be seen so far is the precarious labor-management relations that Ang will inherit once he takes over management of the airline. His people skills will definitely be put to the test in PAL. While it appears that the employees of the companies within the San Miguel group are satisfied with Ang’s brand of management, PAL’s case is an entirely different thing altogether. The other companies in the group are making huge profits, making it easy for Ang to cascade part of any windfall down to the ordinary workers. PAL, on the other hand, is losing money, big money. How Ang will deal with the airline’s labor unions will indeed be worth watching.

Source: http://opinion.inquirer.net/26989/turning-pal-around

Lucio Tan, a.k.a. the Grinch

Published : Monday, December 12, 2011 00:00    Written by : DAN MARIANO

THE season will be less than bright for the 2,600 former regular employees of Philippine Airlines (PAL) who found themselves jobless when the Lucio Tan-owned carrier adopted its so-called outsourcing program last October.

The dismissed regular workers, members of the PAL Employees Association (PALEA), have been replaced by “contractuals” who do the work that PALEA members used to perform, but are hired by other companies contracted by PAL.

The airline owners claimed that they had to resort to outsourcing because PAL has been losing money, insisting that high labor costs were eating away at the airline’s revenue. Of course, they do not mention the fact that the airline management’s decision in 2008 to resort to “fuel hedging” was what really put PAL deep in the red.

In February 2009, PAL president Jaime Bautista was reported to have disclosed that PAL would post its first full-year loss since 2004 primarily because of a hedging program that had been meant to address volatile fuel prices.

In July 2008, crude oil prices skyrocketed to an all-time high of US$147 per barrel but by early 2009 they had dropped to just above US$40. Unfortunately for PAL, its management—which mistakenly assumed that fuel prices would remain high—had locked the carrier to contracts to buy fuel at much higher prices even long after crude costs had begun to drop.

Little information has leaked out of the PAL boardroom as to which company officials were responsible for this costly miscalculation—or if they were penalized at all for a decision that proved financially disastrous for the airline and ultimately its hapless employees.

But instead of owning up to their blunder, the owners and managers of PAL decided to take it out on the ground personnel of the airline—the 2,600 members of PALEA who thereafter began to be portrayed by PAL’s public relations machinery as the biggest financial burden to the company.

Unfortunately for PALEA members, they found no receptive ear in the Department of Labor and Employment and other government agencies as well as Lucio Tan’s “friends” in media. Rather than aggrieved workers, the PALEA members were portrayed as troublemakers who refused to see reason. Eventually, PAL resorted to calling them “terrorists.”

Nearly three months after PALEA members were forced out—literally—of the company’s premises, emotions are still raw. The outrage has not died down, not just among the displaced workers but also members of the general public that now wince every time PAL is described as “the flag carrier.”

Among the staunchest supporters of the victims of PAL’s outsourcing scheme are the Freedom from Debt Coalition (FDC) and other civil society groups. In a recent press statement, these groups called for a boycott of PAL and its bargain airline sister company AirPhil.

“This Christmas break, don’t fly airlines owned by the Grinch,” FDC President Ricardo Reyes told reporters recently. “Because of his greed, Lucio Tan has stolen Christmas of retrenched PAL workers. He acts like the true Grinch.”

Created by Dr. Seuss, the Grinch is a fictional character who first appeared as the main protagonist in the 1957 children’s book, How the Grinch Stole Christmas! Now, it is a term used to describe a person with a coarse and greedy attitude and opposed to Christmas time celebrations.

“It is almost Christmas time—our great Kapaskuhan, a time for families, friends, neighbors, and loved ones to gather, celebrate and share blessings with one another. But not for 2,600 of our kababayan PAL employees and their families who until now face the uncertainty of a prolonged deadlock due to Lucio Tan’s refusal to sit down with PALEA and address their just demands,” said Reyes.

“We are urging the riding public, particularly the students, government and private workers and [overseas Filipino workers (OFWs)] to support the members of PALEA in their struggle against the mass lay-off, contractualization, and their fight to protect their job security. PALEA’s fight is also our fight. As riding customers, we can best support PALEA by hitting Lucio Tan where he hurts most—by not flying PAL and AirPhil, until he sits down with PALEA and address their just demands,” he said. 

Agnes Matienzo of Migrant Forum in Asia (MFA): “In support of the 2,600 PALEA members who are unilaterally locked out and terminated by PAL, MFA continues to call on our fellow OFWs and partners/affiliates in over 16 countries in Asia not to fly PAL this Christmas unless Lucio Tan sits with PALEA and address their demands. PALEA members’ fight is our fight. As migrants’ advocate, we demand host countries to respect the right of our workers overseas to unionize and demand for just wages and job security. How do we expect destination countries to respect and protect the rights of our workers, if the rights of our local workers are blatantly violated? We shall never accept that the rights of our local workers are violated. The interest of 10 million OFWs and the interest of 2,600 PALEA members are one and the same. Boycott PAL and stop corporate greed!”

Max de Mesa, chairman of Philippine Alliance of Human Rights Advocates (PAHRA), said: “PAL workers are co-creators of the wealth of the company. Thus, not only should the quality of life of workers rightfully and proportionately improve as the company develops and grows—this is a collective aspect of the right to development. More important, they should be integral to the company itself. The owner’s and management’s decision to outsource as part of its overall contractualization plan is to deceptively cut off its co-creators of corporate wealth under the false basis of ‘financial losses.’ This is corporate callousness. They have disjointed themselves from the same humanity as their workers so as to accrue profits primarily for themselves. The vaunted plan of separation benefits is no more than a ruse to distract from the truth of corporate greed and the deprivation of workers’ rights.”

Other groups have signed up to the “Don’t Fly PAL/AirPhil” campaign. Whether this boycott will cause Lucio Tan and his underlings to mend their ways—just like another fictional character Mr. Scrooge—by Christmas Day, we’ll find out soon enough.

Frankly, I doubt it.

dansoy26@yahoo.com

http://www.manilatimes.net/index.php/opinion/columnist1/13045-lucio-tan-aka-the-grinch