The Philippines Air courier has been forced to reduce its staffing numbers by around 2,600 as it currently tries to reduce its losses by outsourcing some of its jobs such as catering and call centres. PAL President Jaime Bautista said workers from the airline’s catering, airport services and call centre units will be terminated by Sept. 30 but can be employed by the companies it has contracted to provide those services. The new reductions in staff will see Philippines Airlines reduce its staffing to 5,000 workers in an attempt to survive in the increasingly difficult economic climate that has seen the company lose $312 million in the last 2 years. 400 employees so far have taken an interest in posts being created by contractors.
A union representing the airline employees has already rejected the plan saying it will look to exhaust all remedies including seeking court action. The government has also backed the companies 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 had posted $72.5 million profit in 2010 but fell back into the red with $10.5 million loses for the first quarter of this year. It has blamed volatile fuel prices as well as the fact PAL is blacklisted in Europe (But no mention of the fact PAL pulled out of Europe in 1998 due to finding it unprofitable and also the blacklist is down to poor safety standards), on top of this the Tsunami that hit. The reasoning behind the outsourcing is the company is looking to save around $10 million to $15 million a year hoping to bring the company back into profit.