MANILA, Philippines (AP) — National carrier Philippine Airlines said Thursday it has sent termination notices to about 2,600 workers as it starts outsourcing jobs such as catering amid losses.
PAL President Jaime Bautista said workers from the airline's catering, airport services and call center units will be terminated by Sept. 30 but can be employed by the companies it has contracted to provide those services.
The layoffs will cut the airline's staff to 5,000 and are part of PAL's survival plan launched in 2010 after it lost $312 million in the previous two years.
Bautista said 400 workers have so far signified willingness to accept jobs with the contractors.
But a union for airline employees has rejected the plan and said it will exhaust all remedies, including seeking a court resolution. The government has backed the restructuring.
Bautista said the outsourcing "is a painful but necessary decision to ensure PAL's viability and long term survival." A severance package for the 2,600 workers will cost PAL about 2.5 billion pesos ($58.8 million).
The airline posted a $72.5 million profit in 2010 but is back in the red with $10.5 million in losses for the first quarter of this fiscal year. It blamed volatile fuel prices, a blacklist by the European Union against Philippine carriers, and the devastating tsunami in Japan.
Bautista said outsourcing will save PAL $10 million to $15 million a year, bring profit, and allow PAL to focus on its main business. He said PAL is one of only a few airlines in Asia still operating its own catering and ground handling units.
Contingency measures are in place amid threats of a possible strike by union members, he said, but refused to divulge details.
The airline, with a fleet of 36 jets, is still working on its longer term fleet renewal plans. Bautista said PAL will take deliveries of two Boeing 777-300ER and four Airbus 320 next year and another two 777-300ER jets in 2013.
Budget airline Cebu Pacific said Thursday it is now the largest Philippine carrier in terms of passengers flown and seat capacity. Bautista said Cebu Pacific has flown more passengers but PAL
