Philippine Airlines to cut flights, jobs to cope with losses

Philippine Airlines (PAL), the flag-carrier of the Philippines, has decided to cut flight capacity as well as reduce its workforce in an effort to cope with the losses arising out of the shrinking demand for air travel.

Photo: A Philippine Airlines aircraft

The airline said in a statement that it was compelled to resort to the drastic steps of downsizing capacity and workforce after it suffered a loss of as much as $301.4 million as of the end of March 2009 in the 2008-2009 fiscal.

Philippine Airlines said it would “realign” its capacity in favour of the domestic routes since it was on its long-haul routes, especially the services to the United States, where the economic crisis started first.

The carrier will cut its total capacity by 7% from August 2009 till March 2010. This will result in the reduction of the number of flights to the United States, Australia, Canada, Hong Kong and Japan.

Philippine Airlines has already trimmed down the number of services to Los Angeles from 9 flights a week to 7 flights a week, and to Australia from 7 flights a week to 5 flights a week.

Jaime Bautista, president and chief operating officer of Philippine Airlines, however, stressed in the statement that the reductions in capacity and workforce would not affect in any way the airline’s compliance with safety measures and other standards.

He added that the carrier was looking for new destinations either through charter flights or through regular, scheduled flights.

The airline, according to Bautista, expects to take delivery of brand-new, fuel-efficient Boeing 777-300ER aircraft. It also has almost finished refurbishing its current fleet of wide-body planes to include a two-class configuration, new seats as also the latest entertainment systems.

Jaime Bautista declared in the statement that Philippine Airlines would offer its employees early-retirement packages with a view to cutting costs.

Bautista explained that Philippine Airlines is at present reviewing its whole organisational set-up in order to make it “lean and mean” so that it will be “agile and flexible enough” to get used to the new economic climate.

According to Bautista, manpower currently accounts for 18% of Philippine Airlines’ total spending, and the airline intends to lower this expense to almost single-digit level. Fuel takes up 44% of the airline’s operating expenses.

However, the company did not spell out as to how many of its employees – totalling over 8,000 – would be retired.