PAL may lay off more personnel

Flag carrier Philippine Airlines (PAL) is not in immediate danger of bankruptcy, but may be forced to lay off more employees depending on how its recovery goes once commercial flights are allowed to resume. PAL president and COO Gilbert Santa Maria in an

ANC interview yesterday said revenue losses of the company are nearing $1 billion due to flight cancellations from the coronavirus disease 2019 or COVID-19 pandemic.

“For every month the crisis has passed, we’ve lost over $300 million in revenue, every single month. So now that two months have passed plus the losses in February and March, we’ll be approaching close to $1 billion or P50 billion in revenues that have disappeared because of the COVID-19 virus,” he said.

As soon as the company starts seeing recovery, Santa Maria said PAL would begin assessing what its needs are going to be.

“For example, if we find out that we are going to need to return say 10 to 20 percent of our aircraft because demand just isn’t there – so we don’t have to pay rent, we’ll return the aircraft – well that means we’re going to have to reduce our flight crews and our cabin crews by similar amount because we will have fewer aircraft,” he said.

“While we are preparing for this analysis and we’re preparing to take action at this point as I’ve told the employees, nobody has any job guarantees. The only people who can guarantee our positions is the Filipino passenger who continues to be willing to fly Philippine Airlines,” Santa Maria said.

PAL last February let go 300 of its ground-based administrative and management personnel as part of a business restructuring initiative to increase revenues and reduce costs.

PAL, however, is unlikely to lay off employees in the near term, according to the official.

“At this point in time, it would be extremely inhuman of us to drop our employees on the streets while a pandemic is raging,” Santa Maria said.

“The reality is demand is probably not going to recover for about two, three years so we will have an excess of employees. The question is, what the trajectory of the recovery will be. If the recovery is going to be rapid, then we may end up having to retain more employees than we anticipate. If this is a very long L-shaped recovery then all bets are off,” he said.

While acknowledging that all airlines are on the brink of bankruptcy because of COVID-19, Santa Maria said PAL is “not in immediate danger of bankruptcy” mainly because of the P15 billion that tycoon Lucio Tan has poured into the company.

“Without that liquidity, PAL would probably be not here anymore,” Santa Maria said.

“We’re dealing with a situation which is unprecedented. Our shareholders continue to support us. The government appears to be willing to support us as well. We’re hanging on. We’re waiting and we’ll fulfill our mission as a flag carrier,” he said.

Santa Maria said PAL is eager to fly again and is just awaiting the end of the lockdown.

He said the carrier plans to restart operations once the modified quarantine is lifted by the end of May, but only at a fraction of its normal pre-COVID-19 schedule.

“For international, we’ll probably start between five and 10 percent in June and July of our normal schedule. For domestic, about 20 to 30 percent in June and July, and we will slowly ramp up as demand picks up for both domestic and international,” he said.

Among the international routes PAL is looking to restart are its transpacific flights to Los Angeles, San Francisco, Vancouver, as well as regional flights to Japan and Singapore.

“We anticipate we should be able to restart those routes pretty quickly. So it’s the major business trading partners of the Philippines to where PAL flies direct, those are the cities that we intend to fly to very quickly – the national restrictions for travel for each of those countries notwithstanding,” Santa Maria said.

PAL Holdings Inc., the operator of the flag carrier, reported a net loss of P10.31 billion last year, a 138 percent expansion from the P4.33 billion net loss posted in 2018.