Philippines Airlines Case Essay

Philippines airlines started its history on March 15, 1941 on a small twin-engine beech Model 18 flying 212 of pure skies from Manila to Baguio with a fully load of five passengers. Upon the outbreak of the pacific war, cronys dickens aircraft were pressed into avail with the US army air Corps. Post-war operations began on February 14, 1946 with five ex-military Douglas DC-35. In July, the airline chartered DC-4s to carry Ameri shadow service men home to Oakland, making pal up the first airline to indulge the Pacific. Regular DC-4s service to San Francisco began in December 1946. In May 1947, brother opened a route to Europe. By 1952, the inter subject area route intercommunicate covered two-thirds of the wold, and the government became the majority stockholder. At present, PAL uses the roughly pull ahead technology in the topical anaesthetic airline industry.Technical centers were constructed to perform lay muckle handling for other airlines and contract work for the states and Philippine Military services. Computerized reservations systems consociate most PAL sales outlets 103 in the Philippines and 56 worldwide. The PAL selective information Center at the Manila Domestic Airport is the core of the most extensive computer system in the Philippines today. A massive refleeting syllabus was introduced to be able to cope with the standards of the industry. Indeed, this program paved the way for the bothers they be facing right now.ClosurePhilippine Airlines (PAL) is facing its worst crisis. foremost in the companys mind is how can it possibly outdo problems created by the economic turmoil that has been bagging the Asian region since July 1997- a situation few quarters were able to predict. What do they do in times of decreasing demand for air travel, poor revenues, increasing functional cost, and when credit to cover financial obligations is almost non-existent? The main reason wherefore PAL suffered financial problems was because of the ma ssive refleeting modernization program, which was funded through loans made from local and international creditors.It has reached a point where it can no longer cargo deck up with its obligations. Then, the jade unrest move up into force because of the need to downsize men as a solution to its financial problems. The pilots rejected a fascinate to retire cc colleagues using a provision in their CBA which would non give them enough monetary benefit that will compensate their division of service with the company. Theground employees protested the manner by which the counsel implemented a retrenchment program on their ranks as a result of the 22-day pilots strike. The retrenchment was a bitter pill to swallow.Chain of Events Prior to the ClosureJune 1998The 620 PAL pilots went on strike paralyzing PALs operations. 1,800 ground employees were retrenched.July 1998Philippine Air Lines Employee Association (PALEA) went on strike to demand the reinstatement of the retrenched member s who they claimed were dismissed by violating their CBA provisions. family 1998Lucio Tan gave out a end to PALEA officers, the acceptance of which will pick up the survical of PAL. PALEA officers accepted the proposal.Members of PALEA rejected the proposal and demanded a retraction from the officers. Officers retracted on a condition that a referendum is held on the proposals. Referendum under the sponsorship of DOLE was held. NO votes prevailed. Closure becomes reality.Management side (Interview)The stop consonant was done because the company is on the brink of bankruptcy. It was due to the unforeseen economic crisis. There is no problem with the management and labor. The management then gave a proposal to avoid the closure of the company. Labor side (source from Newspapers)They are afraid that the management can well fire them without the CBA. They are also worried about the recognition of the labor union even if the CBA is suspended.A nonher referendum was made and the YES v otes prevailed which means that they agreed to the proposal of Mr. Lucio Tan by chance because of limited options they have. REACTION (Written by a PAL employee)The upheavals in PAL can best described as pretty Luck. After 57 years in existence, who would have conjecture that management expertise is lacking, maybeinappropriate to the call of the times unless never lacking.The labor unions have enjoyed the rights since day one of their foundation save again due to the call of the times, they have just ask for more. apiece one has its own reasons for being so the collapse of the enterprise come to fore and closure was inevitable.The Yes or No vote.Both are immoral but we chose the lesser evil- Why Yes?1. Yes means reopening of the airline, a must for national interest as well as individual workers interest. The industry is vital to national trade and tourism. Its absence could slow down the Philippine economy further. While its true that there maybe other airlines, PAL has the e dge in facilities, human resources, and worldwide recognition. 2. The gap of CBA can still be questioned in court for its legality and can be pursued by the union. 3. There are labor laws to cling to the workers.Effects of the Closure in the EconomyThe economy then was in recession so the people did not consider air travel. legion(predicate) PAL workers went home jobless. GNP drops because of low productivity. Business opportunities were cancelled or delayed due to lack of Air Transportation.Re-openingPal opened its admission when all the problems were partially solved. Owner Lucio Tan infused capital to the wingless airline, which was not enough for its continued survival. Selling of some assets were considered to pay creditors. It lessened fledge destinations to be able to lower operation cost. A possible management turnover might happen for the survival.Rehabilitation PlanThe plan was chiefly to infuse capital to PAL airlines. Possible investors were invited for the infusio n of the capital. Selling per centum of ownership were also considered. Foreign investors such as Cathay Pacific, northwest were thinking of possible investment to the said airline. A $150 one thousand million capital infusion was planned but the Securities and Exchange Commission (SEC) did not approve it last December 1998. Selling of sharesworth $11.916 million in abacus international, one of the biggest international computer reservation systems in the world was considered to call forth cash for operations. A new rehabilitation plan worth $200 million is set to be submitted on March 15, 1999 for the approval by the SEC.