MANILA, Philippines - Philippine Airlines (PAL) said on Monday it will proceed with the airline's planned restructuring after the Department of Labor and Employment (DoLE) nixed employees' opposition, and said it is management's prerogative to outsource its key operations. 

"We welcome the decision insofar as it recognizes PAL's financial troubles and the need to spin-off non-core services as part of its survival strategy," PAL said in a statement.
 
The affected units are in-flight catering services, airport services (including ground handling, cargo terminal/cargo handling, and ramp handling) and call center reservations.

The spin off will entail letting go some 3,500 out of its 7,500 workforce.

The planned retrenchment was originally set on May 31, but was deferred after DoLE assumed jurisdiction over a simmering dispute between PAL management and its labor unions.

PAL had announced that it will outsource its call center reservations to ePLDT Ventus, which would handle reservations, inquiries, bookings, disruption handling, back-office services and other call center services.

Its catering services will be handled by SkyKitchen Philippines, which is owned by businessman Manuel Osmeña. Also, PAL's cargo handling would be outsourced to Sky Logistics.

At the same time, PAL plans to downsize its medical, information technology and human resource units so that it can let go of 500 more employees.

The cost-cutting measures would save the company about P500 million to P1 billion a year.
 
"With the DoLE decision, PAL must now focus on the tough challenge of surviving the crisis and competing amidst a difficult operating environment. To do this, PAL must implement various revenue enhancement and cost control initiatives that includes outsourcing," it said.
 
PAL is setting aside up to P2.5 billion to compensate the displaced workers.

The Philippine Airlines Employees' Association (PALEA)  slammed DoLE's "midnight decision."

"If need be, we are ready to elevate the case up to the Supreme Court. We maintain that contracting out is illegal," Gerry Rivera, PALEA president and concurrent Partido ng Manggagawa (PM) vice-chairperson, said in a text message to abs-cbnNews.com on Sunday.

Rivera said the DoLE  decision was released with suspicious haste and preempted the ongoing mediation proceedings at the DoLE.

The labor union will file a motion for reconsideration on or before June 28, added Rivera.

In another development, PAL was chosen by the Official Airline Guide (OAG) as the best airline in the country for a second year in terms of flights and seat capacity operating out of the Ninoy Aquino International Airport (NAIA).
 
Data from the OAG, the aviation industry's main data keeper, showed that NAIA's four terminals handled 1,859 flights per week in 2009, an increase of 12% over the 1,654 flights per week handled in 2008.
 
These flights resulted in 309,616 seats per week flown by all airlines using the NAIA complex last year, 11%  more than the 278,130 seats per week flown in 2008.
 
Of this traffic volume, PAL had a market-leading share of 35% of all flights per week, and 38% of all seats flown per week at the country's premier airport in 2009, stated OAG.