Philippine Airlines cuts 300 jobs as losses mount

MANILA, Philippines — Flag carrier Philippine Airlines (PAL) has laid off 300 ground-based administrative and management personnel in a bid to cut costs amid declining demand because of the COVID-19 outbreak.

The country’s largest airline said in a statement on Friday it had completed a business restructuring plan to increase revenues and reduce costs, including a “voluntary separation initiative for long-serving employees and a retrenchment process.”

“Affected employees will receive appropriate separation benefits, additional trip pass privileges, and assistance in the form of career counseling and outplacement support,” PAL said.

The airline said “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.”

“Other initiatives include revenue generation from an optimized route network and new ancillary products, more aggressive cost-management efforts, and investment in digital technology,” it said.

P8.4-B losses

Publicly listed PAL Holdings Inc., which owns PAL, has yet to release its full-year 2019 financial results but its last 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.

Moreover, the airline is also expecting losses due to the travel ban imposed on the important China market in the wake of the COVID-19 outbreak.

The job cuts, affecting about 5 percent of its workforce, will help PAL lower costs after it entered its third consecutive year of losses in 2019.

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.

‘Drop in bucket’

“Cutting 300 employees looks like a drop in the bucket compared to the losses they incurred,” he told the Inquirer.

PAL said aircraft deliveries would continue and that plans to expand to new routes were not affected. These include the launch of new Cebu-Los Angeles nonstop flights and routes to Perth, Pagadian, Kota Kinabalu, and Manado.

PAL Holdings, 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 carrier said.