MANILA, Philippines — Flag carrier Philippine Airlines (PAL) on Friday announced it will lay off 300 workers due to revenue losses in the wake of the imposed travel ban in countries hit by the COVID-19 outbreak.
“Under the program, PAL implemented a voluntary separation initiative for long-serving employees and a retrenchment process completed on February 28, resulting in the separation of about 300 ground-based administrative and management personnel,” a statement issued by PAL read.
The management of PAL said employees affected by the layoff will receive “appropriate separation benefits, additional trip pass privileges, and assistance in the form of career counseling and outplacement support.”
Previously, the country’s flag carrier offered passengers with canceled flights to South Korea to rebook, reroute or refund their tickets following travel restrictions imposed to Filipino tourists going to South Korea.
Only permanent residents of South Korea, Filipinos studying in South Korea and overseas Filipino workers returning for work are allowed to travel en route to South Korea.
Meanwhile, passengers coming from North Gyeongsang Province, South Korea including Daegu City and Cheongdo County will be denied entry except for Filipinos and their foreign spouses or children and holders of permanent resident and diplomatic visas.
Aside from South Korea, the government’s task force also directed a travel ban in mainland China and its Special Administrative Regions namely, Macau and Hong Kong.
Financial bleeding
PAL’s announcement came as the flag carrier attempts to slow years of financial bleeding.
The jobs cuts, affecting about 5 percent of its workforce, will help PAL lower costs as it entered its third consecutive year of losses in 2019.
“The streamlining will strengthen the company in the wake of losses sustained in 2019, aggravated by the ongoing travel restrictions and flight suspensions to areas affected by COVID-19,” PAL said in its statement.
PAL said the job cuts were the result of a retrenchment program and the voluntary separation of “long-serving employees.” Voluntary separation typically involves incentives for workers who choose to resign.
Publicly-listed PAL Holdings Inc., which owns PAL, has yet to release its full-year 2019 financial results. Its latest filing in the third quarter of 2019 showed that losses more than doubled to P8.49 billion, mainly due to higher interest payments to pay for its expanding fleet.
In its statement, PAL provided few other details on measures to cut costs and boost revenues in an era of falling demand as some passengers avoid air travel due to COVID-19.
“Other initiatives include revenue generation from an optimized route network and new ancillary products, more aggressive cost-management efforts, and investment in digital technology,” PAL said.
Joseph Roxas, president of Eagle Equities Inc., said PAL would need to improve earnings or get fresh capital otherwise more job cuts could be on the way.
“Cutting 300 employees looks like a drop in the bucket compared to the losses they incurred,” he told the Inquirer.
PAL said aircraft deliveries will continue and that plans to expand to new routes were not affected. These include the launch new Cebu-Los Angeles nonstop flights and routes to Perth, Pagadian, Kota Kinabalu and Manado.
PAL Holding, which is partly owned by Japan’s ANA Holdings, had a fleet of 98 aircraft at the end of the third quarter of 2019.
“PAL continues to be focused on managing the risks related to the COVID-19 situation, in the interest of public health and safety. In fulfillment of its flag carrier duties, PAL has assisted in bringing home Filipinos from affected areas via recent repatriation flights from Xiamen and Tokyo,” the flag carrier said.