In an effort to sustain profitability, Philippine Airlines has announced that it will be laying off as many as 117 domestic ground crew beginning in November. In addition, the airline plans to cut costs further in other areas and limit spending in the coming year.
The carrier said it will, “disengage from non-core services such as our ground-handling activities in domestic stations, which can be turned over to qualified third-party service providers.” Philippine Airlines did not specify how much it anticipates it will save as a result of the outsourcing programme.
Philippine Airlines employed 2,386 ground crew and 2,512 flight crew at the end of 2014. The carrier recently reported a net income of P5.86 billion (US$125.4 million) in the first half of 2015 after withstanding increased competition, labour unrest, rising costs and a weak local currency. The carrier is eager to avoid returning to red ink on its balance sheet, which included nearly P15 billion in losses over the previous two years.
The announcement follows an earlier outsourcing programme which saw the early retirement of 2,600 personnel over the last few years from in-flight catering, airport services and call-centre operations which were outsourced to third-party providers.
At a recent shareholders meeting, the company revealed that it intends to “continue restructuring its cost base to drive down unit costs and remain competitive.” Retirement of old aircraft and the drop in global fuel prices were also key to its improved position.
In addition to the outsourcing scheme, Philippine Airlines plans to halt all capital expenditures with the exception of those critical to operations. Jaime Bautista, president of Philippine Airlines said planned capital expenditures over the next year are primarily for ground equipment, rotable and repairable parts and a spare engine for B777 aircraft.
The carrier will also reduce the compensation of its top four management executives led by chairman Lucio Tan from P3.4 million to P1.7 million this year.