Stormy labor row halts 172 PAL Flights
Thousands of passengers were stranded Tuesday as Philippine Airlines (PAL) canceled all flights to and from Manila after its employees refused to work in a last-ditch effort to save their jobs.
A total of 102 international flights and 70 domestic flights, which were supposed to carry around 14,000 passengers, were affected by the PAL Employees’ Association’s (Palea) protest.
The strike added to the travel chaos brought on by Typhoon “Pedring,” which made landfall earlier in the day and prompted the suspension of other domestic flights, ferry services and railway operations.
Members of Palea stopped working at 7 a.m. in protest of the company’s scheduled job cuts by the end of the week, forcing the Lucio Tan-led carrier to halt operations.
Employees reported for work but stopped refueling planes, moving cargo and manning check-in counters—among other jobs—leaving thousands of passengers stuck at the Ninoy Aquino International Airport Terminal 2 in Manila.
PAL’s management said flights would resume by 6 Tuesday night, starting with PR 145 to Iloilo.
PAL condemned what it described was illegal work stoppage, noting that those who participated in the protest would face administrative and criminal charges.
“About 300 PAL ground workers on duty at the airport suddenly refused to perform their official functions in the ramp, check-in counters and catering areas. Our lawyers are preparing the appropriate charges to be filed against these workers,” said PAL president Jaime J. Bautista.
Bautista said operations should be back to normal by Wednesday. The termination of the services of Palea members will take effect on Friday.
Apology
Affected passengers were endorsed on flights of other airlines, while others were transferred to hotels.
“Those who want to rebook or a refund of their tickets can proceed to PAL ticket offices,” PAL said in an advisory.
“PAL apologizes for the inconvenience as the airline goes through the difficult process of outsourcing its non-core services,” the airline added.
Palea president Gerry Rivera also apologized to passengers affected by the work stoppage.
The union official said the employees were left with no choice but to move to protect their jobs.
“Any inconvenience brought about by the protest is temporary. Ultimately the safe and efficient operation of PAL is guaranteed if employees are regular not contractual,” Rivera said at a press conference.
Palea’s work stoppage, which the union refuses to call a strike, is in protest of PAL’s plan to close down three departments, namely its call center reservations, in-flight catering and airport services, by the end of the week.
The 2,600 employees covered by the job cuts were offered positions at the third-party service providers that will replace the three closed departments. The companies are Sky Kitchen, Sky Logistics and SPi Global Holdings.
Palea claims that less than 15 percent of its members agreed to receive retirement benefits, while only 7 percent accepted jobs with the third-party companies.
PAL’s outsourcing plan, which was approved by the labor department and the Office of the President, is under appeal in the Court of Appeals. Palea has said the job cuts should not be carried out pending resolution of its appeal.
Replacement employees
At a separate briefing, PAL said it already had replacement employees to take the places of those who walked out. The new workers are made up of volunteers from the airline’s administrative staff and employees of the new service providers.
Bautista said the 2,600 workers to be affected by the outsourcing would be placed on leave with pay and would no longer be allowed inside the airport on October 1, when their termination takes effect.
But the 300 workers who took part in the work stoppage on Tuesday will have to face administrative and criminal charges. “We will hold them accountable,” the PAL president said.
Republic Act No. 9497, which created the Civil Aviation Authority of the Philippines, says that any person “who will cause disruptions in airport operations will be criminally liable.”
Conciliators
If found guilty, Palea members face as many as three years in prison and fines of up to P500,000 per person. Those who joined the work stoppage will also lose their retirement benefits, PAL said.
“We are ready to face any and all charges that they want to file against us,” Rivera said.
Labor Secretary Rosalinda Baldoz sent a team of conciliators to Ninoy Aquino International Airport to try to reconcile PAL management and the ground crew.
In a statement, Secretary Herminio Coloma of the Presidential Communications and Operations Office said President Aquino had directed Executive Secretary Paquito Ochoa to supervise efforts of the labor department, Civil Aviation Authority of the Philippines and Manila International Airport Authority in working closely with PAL management to resolve the matter.
Noting that the government was adhering to the rule of law in addressing
Palea’s stand on outsourcing, Coloma called on the union “to do the same.”
In Cebu, the work stoppage forced hundreds of passengers to either rebook their flights to another date or to arrange flights with other airline companies. Four flights for Manila and five flights from Manila were canceled between 7 a.m. and 6 p.m. on Tuesday.
Passengers disembark
Mary Ann Dimabayao, public affairs manager of Mactan Cebu International Airport, said the flight cancellation came when passengers of the PR 848 had already checked in for departure at 8:05 a.m.
“The passengers were ordered to disembark at the arrival area and retrieve their luggage at the baggage carousel,” Dimabayao said.
She said the passengers were told that they could have their tickets rebooked at different PAL ticketing stations and that the management would waive rebooking and other fees.
Each canceled flight had more than 100 to 200 passengers depending on the plane’s capacity, said Eutiquio Bulambot, a Palea board member in Cebu and a regular worker for 35 years.
Bulambot, who is assigned at the check-in counter of PAL at the airport, said Palea members just wanted to protect their rights. There are more than 200 Palea members in Cebu.
CBA suspension
The dispute between PAL and Palea dates back to 1998 when Palea agreed to an unprecedented deal with management to suspend negotiations for new collective bargaining agreements (CBA) for 10 years, giving PAL the financial flexibility to return to profitability.
The airline was suffering massive losses due to the Asian financial crisis at the time, made worse by a pilot strike, which forced the airline to close down for several days.
PAL was forced to enter corporate rehabilitation and to trim down its fleet after being faced with dollar loans that had become harder to pay due to the
peso’s sharp depreciation. When the CBA moratorium expired in 2008, PAL announced its plan to outsource the three departments.
Industry-wide trend
Bautista said the outsourcing of “noncore” units was an industry-wide trend being implemented by other airlines around the world. Industry profits have fallen steadily due to high fuel prices.
Last year, PAL posted a net income of $72.5 million, but the airline sank back into the red this year, posting a $10.6 million net loss in the April to June period of 2011.
Over the past five years, PAL has also struggled to compete with local budget carriers that have steadily chipped away at the flag carrier’s market share.
From being a virtual monopoly before 1998, PAL is now the second largest airline in the Philippines in terms of passengers flown. The company trails behind the Gokongwei family’s Cebu Pacific.
With reports from AFP, Philip C. Tubeza and Christian Esguerra in Manila, and Jhunnex Napallacan, Inquirer Visaya
WORLD
U.S. Stocks Advance, Trimming Gains in Final Hour, on Greece
By Rita Nazareth
U.S. stocks rose, with benchmark indexes weathering a final-hour selloff, after Greece made progress in meeting requirements for more international aid and Germany vowed continued support for the country. All 10 groups in the Standard & Poor’s 500 Index rose as gains were led by commodity and industrial shares. Dow Chemical Co. (DOW) and United Technologies Corp. (UTX) climbed at least 2.2 percent to pace a rally in companies most-tied to the economy. Financial stocks pared gains as the Financial Times reported that some euro-area countries are demanding private creditors take bigger writedowns on their Greek bond holdings. Bank of America Corp. (BAC) reversed a 3.8 percent advance, falling 1.8 percent. The S&P 500 increased 1.1 percent to 1,175.38 at 4 p.m. New York time, rising 4.1 percent in three days, the biggest gain over that same period since Aug. 30. The Dow Jones Industrial Average rose 146.83 points, or 1.3 percent, to 11,190.69 today. “The chorus is getting louder that Europe needs to do something,” James Dunigan, who helps oversee $109 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “If we step away from the edge and avoid a recession, then there’s no doubt there’s value there.” A four-day rout last week erased $1 trillion from U.S. equities amid concern Greek insolvency is inevitable and Europe can’t contain the damage. The decline left the S&P 500 trading at 12.4 times earnings in the past 12 months, 4.4 percent below its average valuation at the lowest point during the last nine bear markets, according to data compiled by Bloomberg. ‘Hospital Patient’
“Think of Europe as a hospital patient,” David Sowerby, a Bloomfield Hills, Michigan-based portfolio manager at Loomis Sayles & Co., which oversees $150 billion, said in a phone interview. “There are lots of doctors in the room, but no clear-cut remedy.” The MSCI All-Country World Index rallied 2.9 percent. German Chancellor Angela Merkel said Greece is ready to fulfill the conditions laid down by the so-called troika assessing Greek progress at meeting the terms of its international rescue. Greek Prime Minister George Papandreou won parliamentary backing for a property tax to meet deficit-reduction targets required to avoid default. European leaders “finally get it,” Pacific Investment Management Co.’s Mohamed El-Erian said in a radio interview with Tom Keene and Ken Prewitt on “Bloomberg Surveillance.” “Let’s not underestimate both the political challenges and the engineering challenges.” Absorb Bigger Losses
The Financial Times reported that as many as seven of the 17 nations using the euro believe private creditors should absorb bigger losses on their Greek bond holdings, a division that may threaten an agreement reached with private investors in July. The paper cited unnamed senior European officials.
The Morgan Stanley Cyclical Index of companies most-tied to the economy added 2.2 percent. The Dow Jones Transportation Average, a proxy for the economy, gained 1.6 percent. Dow Chemical rose 4.4 percent to $25.59. United Technologies climbed 2.2 percent to $73.15.
PulteGroup Inc., the largest U.S. homebuilder by revenue, added 1.2 percent to $4.16, as a report showed that home prices in the U.S. fell less than forecast. The S&P/Case-Shiller index of property values in 20 cities fell 4.1 percent in July from the same month in 2010, after a revised 4.4 percent drop in the 12 months to June. The median forecast of 28 economists surveyed by Bloomberg News projected a 4.4 percent drop. Bank of America
Financial shares in the S&P 500 pared a gain of as much as 3.2 percent, rising 0.4 percent. The KBW Bank Index (BKX) lost 0.1 percent, reversing an advance of 3.3 percent. Bank of America declined 1.8 percent, the most in the Dow, to $6.48. JPMorgan Chase & Co. (JPM) lost 0.3 percent to $31.57 after rallying as much as 4.7 percent. The S&P 500 has climbed 5.5 percent since falling as low as 1,114.22 on Sept. 22, the first time this month it slipped below its closing level of 1,119.46 on Aug. 8. The index is within 3.5 percent of erasing its 6.5 percent loss for last week, the biggest since the period ended Aug. 5, according to data compiled by Bloomberg.
Stocks rose today even as a report showed that confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades.
Most advanced economies are lapsing back into recession while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, co-founder and chairman of Roubini Global Economics LLC.
‘Hard and Soft’
“The way I see the global economy, I think we’re entering into a recession again in most advanced economies,” Roubini said in a panel discussion today at the Bloomberg Dealmakers Summit in New York. “I think we’re already into one in the U.S. based on the hard and soft data -- same with most of the euro zone, same with the United Kingdom.”
Walgreen Co. (WAG) slumped 6.3 percent, the most in the S&P 500, to $33.77. The largest U.S. drugstore chain said failure to renew a contract to provide prescriptions for Express Scripts Inc. (ESRX)’s customers will reduce its fiscal 2012 earnings. The company said it’s made “no substantial progress” in negotiating a renewal of the contract with Express Scripts, a manager of drug benefits. The contract, worth more than $5 billion in annual drug sales, expires at the end of the year.
COMMODITIES
Commodities Rise Most in Four Months as Concerns Ebb on Europe Debt Crisis
By Elizabeth Campbell and Chanyaporn Chanjaroen
Commodities rose the most in four months, led by metals and energy, on signs that European policy makers will intensify efforts to contain the region’s debt crisis.
The Standard & Poor’s GSCI index of 24 raw materials rose 3.3 percent to 620.02 at 3:45 p.m. New York time, the biggest gain since May 9. Last week, the gauge plunged 8.2 percent. Greek Prime Minister George Papandreou won parliamentary backing for a property tax to meet deficit-reduction targets required to avoid default. U.S. Treasury Secretary Timothy F. Geithner had predicted that European governments will step up their response to the crisis. “Some people put some risk trade back on after last week,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “People are hoping for a solution to the euro zone debt crisis.” All of the GSCI components posted gains. In London, lead prices jumped the most since August 2009, and nickel rose more than 5 percent. In New York, crude oil posted the biggest increase in four months, and silver climbed the most since July.
The MSCI World (MXWO) Index of equities advanced for the third straight session, and the dollar declined for the second day in a row against a basket of six major currencies, enhancing the investment allure of commodities. “Hopes of a bailout solution for European banks are prompting a change in sentiment across financial markets, helping energy and base metals to rebound from steep losses,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “But the situation is still fragile, given persisting economic concerns, so a renewed price fall cannot be ruled out.” The GSCI index has dropped 1.9 percent this year. In April, the measure reached a 32-month high.
“The selloff is probably not over,” Tobias Merath, the head of global commodity research at Credit Suisse AG in Zurich, said in a report. “Indicators of funding stress are still showing growing and not easing pressures.”
