31 March 2010 PAL statement on European Union (EU) issue

from the regulations of the U.S. FAA and the Joint Aviation Authorities of Europe (JAA), as well as industry best practices. Moreover, regular maintenance of the PAL fleet is undertaken by Lufthansa Technik Philippines, a Philippine Airlines is gravely concerned over the recent subsidiary of Lufthansa Technik AG of Germany, the decision of the European Commission (EC) banning all Philippine carriers from operating in member-states of the worlds leading provider of maintenance, repair and overhaul services for commercial aircraft, engines and European Union (EU). components. Despite the unfortunate inclusion of PAL and all other local As an added assurance, PALs internal Safety Management carriers in the EC blacklist which is a direct consequence System is comprised of the following elements: of the downgrade of the Philippine governments aviation Safety Policy and Objectives spells out PAL safety rating PAL would like to assure the riding public managements commitment to safety and the that safety remains the bedrock of PALs operations. It has continuous improvement of the system; always been the flag carriers policy to ensure that its passengers fly with the full assurance of safety and comfort. Safety Risk Management outlines how hazards and their underlying risks are identified through the use of simple to sophisticated tools, and where PAL laments that the EC decision came about measures are formulated to mitigate these risks; notwithstanding PALs safety record, as borne out by its Safety Assurance outlines how quality- and safetycompliance with internationally accepted safety standards, assurance methods such as audits and inspections including the IATA Operational Safety Audit (IOSA) and are regularly conducted to verify compliance to audits by major foreign aviation regulatory authorities. For standards and regulations; and four consecutive years since 2006, PAL is the only IOSAcertified Philippine carrier. Safety Promotion outlines how safety is inculcated in the minds of all PAL staff from the day they are Two recent events led to the inclusion of Philippine carriers hired until their retirement. in the EC ban, namely: 1) the U.S. Federal Aviation Administrations (FAA) decision in January 2008 downgrading the Philippines safety rating to Category 2; 08 August 2010 PAL reaches out, seeks amicable solution to labor woes and 2) the significant safety concern findings by the The management of Philippine Airlines (PAL) today International Civil Aviation Organization (ICAO) in (August 8) said it remains hopeful that it could resolve its November 2009 against Philippine aviation safety labor problems and arrive at a productive solution during regulators. But despite the Philippines Category 2 rating, it must be scheduled talks with the Flight Attendants and Stewards noted that the U.S. FAA continues to allow PAL to operate Association of the Philippines (Fasap) and PAL Employees up to 33 regular weekly flights from the Philippines to Los Association (Palea) this week. Angeles, San Francisco, Honolulu, Las Vegas and Guam. PAL safely flies thousands of passengers, including U.S. We are coming to the table with the best intention of citizens, across the Pacific Ocean on a regular and reliable fruitfully resolving the issues with the flight attendants and basis in compliance with stringent U.S. safety regulations. stewards as well as Palea, PAL president and chief operating officer Jaime Bautista said. PAL welcomes the EC air safety committees decision to visit the Philippines so that aside from Philippine aviation PAL management and Fasap officials will meet at the regulators, it can also inspect and audit local carriers. PAL Department of Labor and Employments National Conciliation and Mediation Board in Manila on their is prepared for such audit and is confident that EC inspectors will find a picture of PAL as a world-class carrier collective bargaining agreement (CBA). of uncompromising professionalism and efficiency. Bautista said the PAL management is eager to find common grounds with the flight attendants and stewards, saying the PAL is also ready and willing to lend a hand to the CAAP the company recognizes the aspirations of its workers for especially its new Director General Alfonso Cusi, as the competitive remuneration and benefits. agency strives to professionalize its ranks and regain its We're open to a dialogue. Its just give-and-take. I hope we international safety rating. will all come to the negotiating table with open minds and Since 2006, PAL has been in compliance with IOSA. The hearts as we discuss issues, Bautista said. IOSA program, which is ISO 9001:2000 certified, is a I know the families of our employees are anxious too and rigorous audit focusing on the entire operational want to see the issues resolved amicably and as promptly as management and control systems of an airline in promoting possible. We share their concern, he added. safety, based on internationally recognized standards and Meanwhile, Bautista said he's still hoping that the 26 pilots supported by a strict quality assurance process. who suddenly left without notice would meet the August 9 deadline to go back to work. "PAL, government and the These IOSA standards are derived from relevant ICAO entire nation are waiting for their return so they can render guidelines, in particular, Annexes 1, 6 and 8, as well as

service not only to PAL but the general public," he said. He added that PAL has yet to decide the exact course of action the airline management will take should the pilots fail to return. "We will study it carefully," he said.

The second conciliation conference was again held at the DOLE office with officials of the National Conciliation and Mediation Board (NCMB) trying to reconcile differences between the two parties.

Bautista appealed to PAL employees to understand the Another meeting has been scheduled next Wednesday, company's situation, saying that it has been very transparent September 22. in disclosing its financial condition. We are all aware that most airlines in the world, including PAL, have been affected and continue to be affected by the global recession and slowdown in travel, he pointed out. Government hopes PAL problem to be solved soon He said PAL is trying to survive amidst the harsh environment in the travel industry worldwide, aggravated by the continued rise in jet fuel prices, downgrade of the Philippines' aviation safety rating to Category 2 status by the US Federal Aviation Administration, the European blacklist of RP carriers and cut-throat competition. We hope our fellow PAL workers will understand that we are dealing with the worst crisis that hit the global airline industry, crippling even the giant airlines of developed economies, Bautista pointed out. (philstar.com) Updated August 02, 2010 09:01PM MANILA, Philippines (Xinhua) - Transportation and Communications Secretary Jose de Jesus admitted today the possible serious consequences on the country's economy if the problem involving flag carrier Philippine Airlines (PAL) is resolved immediately. "We can only say that it will certainly will," the official told reporters in Malacanang presidential palace when asked if the PAL problem will have serious effect on the economy if not address immediately.

"It will affect trade, it will affect tourism and ultimately, it will affect our reputation. This is the matter we're putting 18 September 2010 before the pilots and PAL management to be aware that this PAL still hopeful of FASAP resolution has very serious consequences unless it is resolved," he Philippine Airlines (PAL) management remains hopeful of explained. settling the remaining issues raised by the Flight Attendants Some government officials led by De Jesus met separately and Stewards Association of the Philippines (FASAP). PAL officials and representatives of the airline pilots on PAL management, led by PAL President Jaime J. Bautista, Monday in Malacanang after the flag carrier cancelled some of its domestic and international flights starting and FASAP were able to exhaustively discuss FASAP's Saturday due to lack of pilots. three pending issues at today's (Sept. 17) second conciliation conference, with both sides working towards a More than 20 PAL pilots resigned due to labor issues and resolution at the soonest possible time. for greener pasture abroad, resulting to the disruption of PAL operations. "After the meeting, it was agreed that assistance of the "The objective of this (meeting) is try to stem the tide of Bureau of Working Conditions under the Department of Labor and Employment (DOLE) will be sought," said PAL exodus of pilots," De Jesus said. spokesperson Cielo Villaluna. Despite the problem, he said the government has no plan yet to take over the operation of PAL but he reminded the The negotiations focused on three remaining issues: PAL management and the pilots that it is the government retirement age, economic package and gender issue. that issued the franchise and the license, respectively. The government officials will meet again with the pilots, especially those who resigned, after which a dialogue between the PAL management and the pilots will also be done. De Jesus expressed hope that the problem will be resolved Hope wanes for quick resolution of Philippine Airlines within the week as PAL has started publishing its flights to issue: gov't guide the riding public. The Philippine government's hope for a quick resolution of "Hopefully within the week (we can resolve the problem) the problem besetting national carrier Philippine Airlines and we' re urging both the Philippine Airlines and pilots to (PAL) this week began to wane when it became clear that remember that they are engaged in a public service that the grievances of its resigned pilots extended way beyond partakes public interest, " he said. low salaries, Malacanang said Wednesday. He said some of the PAL flights will be merged and a large Presidential spokesman Edwin Lacierda, who has been part aircraft will be used to accommodate more passengers. of the separate government discussions with PAL management and the representatives of the concerned pilots, said in a news briefing that while a possible government takeover of PAL has been discussed, another option is being considered.

Asked whether the government remains hopeful that the PAL problem can be resolved this week, Lacierda said that government officials have been "getting more and more information on the conditions from both sides" that show the extent of the problem.

understanding as it adjusts flight schedules and merges some flights. It also intensified the training of more pilots to fill the gap.

We apologize to our loyal patrons for the inconvenience. We know our passengers missed connecting flights, "We are still hoping that it can be resolved this week but we including important personal and business appointments. are going to do it day by day. I cannot guarantee you if we But the pilots resignation is something we couldnt can do it this week. But we will exert all efforts to resolve prevent. Many of them simply did not show up for work this situation as soon as possible," he said. and just handed in their resignation letters. Some of them even owe PAL millions of pesos for the cost of their Lacierda said that despite the problem, "the riding public training, the flag carrier said. has not been prejudiced so far because PAL has modified its flight schedules in order to accommodate the concerns of PAL added that most of the resigned pilots were reportedly the riding public." pirated by other carriers in the Asian region including the Middle East where the pay is allegedly two or three times As for a government takeover, Lacierda said that "it is not their current salaries. an option for now." "We're looking at other options," he By Philippine standards, an Airbus A320 pilots pay at said, without elaborating. PAL is considered high. But its still no match to the offer of foreign carriers. Our problem is, our competitors abroad Twenty-five PAL pilots resigned over the weekend due to seem to prefer PAL pilots because of they were highlylabor issues and for greener pasture abroad, resulting to the trained by PAL and renowned for their flying skills, PAL disruption of PAL operations. added. Considered Mission Critical Skills, pilots and aircraft mechanics are required by government regulations to give 01 August 2010 PAL Rejects Pilot's resignation; Asks them to return to worktheir local employers at least 180 days or six months to find suitable replacements before taking another job abroad. To avert more flight delays and cancellations, the management of Philippine Airlines (PAL) today (01 August PAL said it is in talks with various government agencies 2010) said it rejected the resignation of more than two dozen pilots and gave them seven days to return to work. like the Philippine Overseas Employment Administration (POEA) and the Civil Aviation Authority of the Philippines In a statement, the flag carrier called on its pilots to respect (CAAP) to avert the loss of more pilots to poachers their existing contracts with PAL and demanded that they abroad. immediately return to work or face civil, criminal and administrative charges. Philippine Airlines Flight Attendants Plan Strike For End Of October This developed as PAL was again forced to cancel eight (8) flights today owing to the pilot shortage, but most affected October 1, 2010 - Philippine Airlines passengers were accommodated in merged or succeeding (PAL) has urged the Department of flights. PAL makes sure that all passengers are attended Labor and Employment (DOLE) to take to, the airline said as it assured the public that it hopes to immediate steps to avert a planned strike get schedules back to normal within a week. by its flight attendants. The eight cancelled flights include Manila-Cagayan-Manila (PR181/182); Manila-Bacolod-Manila (PR133/134); Manila-Iloilo-Manila (PR147/148); and Manila-CebuManila (PR847/848). Meanwhile, a Manila-Iloilo-Manila flight (PR145/146) that usually departs Manila at 4:20PM was rescheduled to 6:30PM. PAL doesnt want to get in the way of its pilots dream of landing better paying jobs abroad, but they have contractual obligations with the company and a moral responsibility to thousands of passengers, PAL stressed. In the last few days, PAL was forced to cancel several regional and domestic flights after 13 captains and 12 first officers flying its Airbus A319s and A320s resigned from the flag carrier. They left without giving PAL ample time to train replacements, PAL said. Recognizing the plight of its passengers, PAL sought public PAL made the appeal following the decision of its cabin crew union to withdraw from talks and its announcement to proceed with its planned work stoppage. "PAL would like to assure our passengers that a strike will not happen overnight. Management is asking DOLE to immediately step in to avert the strike and protect the interests of the riding public," PAL spokesperson, Cielo Villaluna.

"It was upon DOLE's recommendation that PAL and the Flight Attendants' and Stewards' Association of the Philippines (FASAP) agreed to a recess and to meet again next week. PAL management was surprised by FASAP's sudden turnaround by announcing their decision to strike," she stressed.

FASAP will also show some degree of flexibility. Nothing less than a true meeting of minds is needed to resolve the current impasse.

As of the last round of talks, agreements in principle were only on maternityrelated benefits, and rice allowances amounting to P25-million. The agreement between both Villaluna said PAL has been negotiating in good faith and sides must be forged as a package in order to settle all has bent backwards to accommodate some of the FASAP's economic, gender and retirement issues. Bautista said P105-million from the original P80-million is PALs best demands. "It is the union that is playing hardball, offer given massive losses of US$312-million or over P15dismissing outright management's offers without even a billion in the last two years. Meanwhile, the early second glance. Villaluna explained that PAL's P105retirement age is benchmarked on PALs major million is hardly unreasonable considering the airline's competitors in the region whose cabin crews are retired staggering losses in the last two years. PAL, she added, even agreed to increase the retirement age to 45 from 40 if between the age of 35 and 45. the union would allow junior cabin crew members to fly international along with their senior counterparts. As a precondition to the change in retirement age to 45 from the current 40, PAL is pushing for the mixed crew "Contrary to FASAP's claims, there will be no layoffs as a complement. The set up will allow both international and domestic crews to work side-by-side. By allowing result of the mixed crew scheme. There will also be no domestic crews to fly international and international crews reduction in flight assignments and pay of international cabin attendants. Why is FASAP so averse to the idea of to fly domestic routes, we hope to achieve two things: 1) allow domestic crews to experience flying abroad to earn their younger members earning a little more?" Villaluna added that PAL's early retirement age is benchmarked to more in terms of per diems and other allowances; and 2) other carriers in the region. "PAL maintains that while the maximize utilization of PAL crew members, thus reducing early retirement age is negotiable, it is by no means illegal need to hire more cabin attendants and therefore save on costs, Bautista said. or immoral." "Philippine Airlines is preparing emergency measures in FASAP has reported it will proceed with its strike after case such a strike should occur. PAL is hopeful that DOLE coming out from Tuesdays conciliation meetings with the will immediately step in to avert any work stoppage that Lucio Tan-led PAL management at the National Conciliation and Mediation Board / Department of Labor can wreak havoc to the economy. Villaluna added that and Employment. The talks are deadlocked. FASAP from day one, "FASAP has not shown any intention to consider anything short of their demands. "A negotiation is president Bob Anduiza said PAL is playing games and is like a two-way street; it's give and take. It's very difficult to insisting on its unreasonable retirement age limit. They are deal and negotiate with a party who only wants things to not serious in resolving the dispute. PAL is just playing deaf and blind to the concerns of the flight attendants. go their way." According to FASAP, during the DOLE Conciliation Meetings, FASAP readily reduced its issues and limited the concerns to only three (3) items, touching mainly on the age The management of Philippine Airlines (PAL), led by its and gender discrimination issues. In a statement, FASAP President Jaime Bautista, urged the Flight Attendants and said, PAL is adding more conditions to muddle the issue Stewards Association of the Philippines (FASAP) to and intends to make more money out of the dispute. Its seriously consider and accept PALs P105-million economic proposals to move the retirement age from 40 to 45 on offer as well as the proposed retirement age of 45 for those condition on drastic work-rule changes to mix the domestic hired by the airline after November 2000. The call was and international operations will result to retrenchment and made at the resumption of conciliation talks between PAL mega-profits for PAL. PAL wants to paint itself as management and FASAP at the Department of Labor and reasonable but the real motive is to exploit the flight Employment (DOLE). The tripartite conciliation conference attendants. is the fourth meeting since FASAP filed its notice of strike last September 9, 2010. Three conciliation conferences When asked when the strike will be held, Anduiza said between both sides have been held under the auspices of that it can happen between the end of October and the first DOLE. week of November after the mandated cooling-off period and the holding of the strike vote. PAL misses the point. I wish to assure FASAP members that PAL management is This is not about making money. This dispute is about not taking a hardline stance. Despite serious financial discrimination. The Philippine Commission on Women has difficulties, the company bent backwards to provide FASAP already pronounced that PAL's policy towards its female members what it believes is a fair amount of pay increase flight attendants is discriminatory. The Commission on and benefits that it can afford at this time, Bautista Human Rights chair, Ms. Etta Rosales has also pointed-out stressed. Saying that PAL is sincere in its efforts to put that PAL's retirement, pregnancy and maternity provisions closure to the 2005-2010 CBA, Bautista is hopeful that

for flight attendants are sexist and discriminatory, in violation of their human rights.Anduiza stressed. According to FASAP, PAL is also refusing to correct the minimum wage levels on the flight attendants' basic salaries. During yesterday's NCMB meetings, a DOLE representative presented the correct minimum wage levels from the year 2000 up to the present. It clearly showed that the PAL flight attendants' entry level pay of P8, 605 is way, way below the present P12, 288 minimum wage. Bob Anduiza pointed-out. Bob Anduiza lamented that we believe that PAL can well afford to pay and settle the labor dispute based on the hundreds of millions PAL has saving due to the undermanning of crew per flight. The crews are already working more and are being paid less. The problem is PAL does not want to prioritize taking care of the flight attendants. FASAP finds no more need to meet with PAL and will now concentrate on preparing for the strike. FASAP will proceed with its strike as planned to protest against PAL's outdated and sexist policies. This is not merely about pay increases, this is mainly about the respect and dignity of female flight attendants. It's about discrimination. Bob Anduiza added.