Philippine Airlines is to slash 2,600 staff in a bid to return to profitability. The restructuring was described by president Jaime Bautista as a “painful but necessary decision to ensure PAL’s viability and long-term survival”.
Jobs will go across the flag carrier’s catering, airport services and call centre reservations units. Staff affected by the cuts can still be employed by the firms contracted to provide those services as part of an outsourcing scheme.
“We assure affected workers that they will all receive their separation pay and other benefits that are at par, if not better, than industry standards. Guaranteed employment also awaits them at our third-party service providers,” Bautista said.
The outsourcing is expected to reduce the carrier’s operating costs by up to $15 million a year. The cuts are a central part of a survival plan unveiled early last year after it lost $312 million in its 2008 and 2009 fiscal years.
While the carrier posted modest profits of $72.5 million in 2010, it sunk back into the red after recording $10.6 million losses for the first quarter of the current financial year.
The loss was blamed on “unstable fuel prices, the devastating earthquake and tsunami in Japan and the lingering conflict in the Middle East and North Africa”.
The airline said it also continues to suffer from a European Union blacklist against Philippine carriers, “cut-throat competition and a host of other external factors”.