Grounded Philippine Airlines (PAL)has won a reprieve from a final shutdown, following a "yes" vote by ground staff to accept a government-brokered last-ditch deal to revive the ailing carrier financially .
The 6,500-strong PAL Employees Association voted on 2 October by a two-to-one margin to accept the deal reached with the airline's management five days earlier. The result reverses an earlier union vote to reject the labour agreement which resulted in PAL's chairman and 67% owner, Lucio Tan, closing the airline on 23 September.
PAL plans to resume limited domestic services from 7 October, operating to 14 destinations from Manila. It initially intends to put nine of its former 54-strong fleet of aircraft back into service on that date, comprising three Airbus A330-300s, two A320s and four Boeing 737-300s. "The resumption of international services is now being reviewed," says PAL.
The move could spell an early end to Cathay Pacific Airways and its sister carrier Dragonair operating on Philippine domestic routes. Under a 30-day wet lease agreement with the state-run Philippines National Bank Holdings, Cathay Pacific has been operating six daily return flights from Manila to Davao and Cebu since 28 September, using A330s, while Dragonair added three daily A320 flights to Bacolod and Cagayan de Oro from 1 October.
Cathay's parent Swire is one five foreign parties named by PAL as being interested in investing in part or all of the carrier. The others include EVA Airways of Taiwan, Lufthansa, Singapore Airlines and Northwest Airlines.
With PAL's debts close to matching its $2.1 billion worth of assets, the airline is in urgent need of finance.
Ahead of the employees' vote, Tan asked up to 100 senior managers to tender resignation letters to "-give prospective investors in PAL a free hand in organising a new team". Philippine law caps foreign ownership at 40%, while Tan and the government have both agreed to give employees a 20% share and four seats on the board in return for a suspension of collective pay bargaining.
The challenge is now to restructure the airline and its 8,700 remaining staff before the Security and Exchange Commission lifts its protection from creditors on 20 November. Some 16 lessors have filed to take possession of 24 PAL aircraft, while two 747-400s have already been seized by the Exim bank and the first of eight leased A340s and A300B4s have been returned to Airbus.
Source: Flight International
