Philippine Airlines confirm record losses

MANILA -- The Philippine Daily Inquirer published an article last March 2 that quoted a a letter to employees from PAL COO Gilbert Santa Maria which said long-term debt was "unsustainable," lease obligations amounted to "billions" of dollars. 

The coronavirus outbreak and the Mt. Taal eruption last January "aggravated" the airline's financial woes, according to the report. 

The flag carrier said Friday it laid off 300 employees citing the reasons stated in Santa Maria's memo, as reported by the Inquirer.

"We confirm that the article generally describes the current condition of the airline and the steps taken by the Management and majority shareholders to address the situation," PAL Holdings told the stock exchange.
Shares of PAL Holdings fell 4.35 percent on Monday. It disclosed the layoffs after trading hours Friday.

According to the Inquirer, PAL incurred a net loss of $208 million (P10.6 billion) in 2019, the largest in its history,.It was also the third straight year of losses for the carrier controlled by billionaire Lucio Tan.

No 2019 earnings data were included in Monday's disclosure to the stock exchange.

PAL chief, Mr Gilbert Santamaria also said “Unfortunately, the closure of our Manila hub during the Mt. Taal Volcano eruption last January and the ongoing COVID-2019 crisis that shut down all our flights to mainland China, Hong Kong and Macau, has only worsened what was already a difficult situation,” He added,  To survive this difficult phase PAL needs to “ generate more revenue by increasing yields and loads and by optimising its network; create more revenue streams in ancillary products like cargo, loyalty programs and charter operations, and drive a digital transformation for greater efficiency and reliability.” 

Also needed, he said, was “ a comprehensive and aggressive approach to managing our costs, including reduced maintenance, repair and overhaul, and ground operations costs, including catering; reduce spending for key commodities such as fuel and services, and an organisation restructured for greater efficiency and effectiveness with increased utilisation, simplified processes, greater scale and investment in automation.”

The retrenchment program announced last Friday which saw an estimated 300 employees lose their jobs, PAL also initiated a voluntary separation program (VSP) for eligible long-serving employees as a necessary restructuring effort to reduce overhead costs.

“Those whose VSP applications were accepted will be informed in the next few days,” he said, adding that he needed the airline’s employees’ “patience, understanding and cooperation as we take tough and decisive action” to help ensure PAL’s survival.

“I will not sugarcoat the harsh reality for our colleagues who will be affected by this retrenchment, they too helped build the airline and they will always be fellow members of the PAL family,” he said in his letter to the staff.

“But many more colleagues and other stakeholders will face a harsher reality if we fail and PAL ceases to fly after almost eight decades, so we must continue to face the challenges that beset us, and overcome them,” Santa Maria said. “We are all fighting for the future of Philippine Airlines, and I have faith that we will prevail.”