Recent Posts

Breaking News

Pink slip and Chapter 11

Pink color is now in vogue.  For ‘plantitas and plantinos,” one of their favorites is the pink princess Philodendron, one of the most stunning vine plants, with dark green leaves and a speck of pink color. It is  low maintenance and easy to grow indoors.

For an employee, however, receiving a pink slip is a dreaded occasion. The recipient will soon become a member of the ballooning reserve workforce.

This piece is a follow-up of an earlier column I wrote  almost a month ago that flag-carrier Philippine Airlines (PAL) is facing financial constraints largely because of the pandemic and the ensuing lockdown that caused the stoppage of business operations.

As I wrote  in my previous piece, PAL management has fully recognized that it is having financial constraints. Admitting its condition is the first step. The next is to evaluate the available avenues to take to correct the situation. Finance Secretary Carlos “Sonny” Dominguez early this week assured the sovereign is prepared to assist the domestic airline industry provided the government would not own it.

PAL, between now and 2021, needs “a little over $500 million,” to restructure obligations from both local and foreign creditors, including suppliers and infusion of new money to keep it flying.

To resolve this, I heard that instead of doing it here in the country through the Financial Rehabilitation and Insolvency Act (FRIA) of 2010, PAL is considering filing a “court-assisted rehabilitation in the US” by declaring Chapter 11. “FRIA is localized. Filing for Chapter 11, is more acceptable to its foreign creditors that include US-EximBank,” a banking source told me.  Chapter 11 is a provision of the US Bankruptcy Code that provides financial restructuring to a corporation,

Although I’ve  heard from the banking corridor about is the readiness of the Development Bank of the Philippines (DBP) to participate in the restructuring of PAL’s domestic debts but “not as lead arranger.” It will be Philippine Bank of Communications (PBCom).

Though, S&R membership shopping owner Lucio Co controls 49.9 percent of the PBCom, cigarette tycoon Lucio “Kapitan” Tan is reportedly comfortable with this proposition because of his close ties with the Chung and Nubla families that control the other half of the bank. Years back, Kapitan provided a bridge financing to the Nubla family when PBCom was in the same dire straits condition.

 And to cut on the maintenance and operating expense, paring down of the workforce will be adopted effecting up to 35 percent of PAL’s employees/mid-tier management officials.

Gloom now pervades the corridors of PAL’s headquarters on DM Avenue as employees await who will  receive the pink slips.

Pre-pandemic, Pinky – yes, this is real name – took the plunge when the airline management offered an early retirement package. Prior to the lockdown, PAL offered to those who volunteered and qualified 1.25 percent of its monthly salary for every year of service under the category 20 years and above. For 50 years in service and above, it was still 1.25 percent but with a lifetime free tickets on PAL routes and destinations.

And, for those 50 years old but  only with the airline for seven years but volunteered to retire, it’s 1.25 percent of the monthly salary plus free tickets. “Yes, I am lucky,” Pinky told me. She’s somewhere in the US now tending to her family.

This will be the second time as a business journalist I am writing about PAL going for a rehab. As a loyal customer of a full-service airline, I’m crossing my fingers the flag-carrier will again soar like a phoenix in the friendly skies.

Talkback to me at sionil731@gmail.com


Source: Manila Bulletin (https://mb.com.ph/2020/10/09/pink-slip-and-chapter-11/?utm_source=rss&utm_medium=rss&utm_campaign=pink-slip-and-chapter-11)

No comments