Manila: Philippine Airlines announced that it will release a total 2.6 billion pesos (Dh221 million) as separation benefits to more than 2,300 workers affected by the flag carrier's move to outsource services to contractors.

In a statement, Philippine Airlines (PAL) said it will begin disbursing the separation package of its workers from three "non-core" business units whose functions were outsourced to third-party service providers.

Last October 1, PAL said that it is spinning off its catering, ground handling and call centre servations services to another business entity.

PAL said that the first batch to receive the package are employees who did not join the September 27 wildcat strike and are now working for PAL's service providers.

"To follow are those who declined the job offer but did not participate in the work stoppage - they will receive their checks starting October 15, 2011," the carrier said.

The strike had caused disruptions in PAL's local as well as international flights and had caused massive traffic jams near the airport that inconvenienced passengers. 

Work stoppage 

The work stoppage had been carried out by the PAL Employees' Union (PALEA) ahead of the October 1, 2011 implementation of the outsourcing programme.

PALEA members were apprehensive that the spin off move would result in the loss of their livelihood. Some of the union members had been serving the carrier for several years.

An estimated 14,000 passengers had been incovenienced by the flight disruption which occurred at the height of typhoon Nesat.

PAL said it will spend about 2.6 billion pesos to cover the transition benefits, partly financed through a $50-million loan from European bank Credit Suisse.

PAL spokesperson Cielo Villaluna said components of the package are much higher than industry levels and more than the prescribed benefits under the country's Labour Code and PAL's own Collective Bargaining Agreement with its ground workers' union.

Majority of the workers shall receive an average of close to 800,000 pesos (Dh68,030) in separation pay, which includes 125 per cent of their monthly salary for every year of service; 100,000 pesos (Dh8,503) gratuity pay and 100 per cent accrued vacation and sick leaves converted to cash.

Considered as Asia's first airline, the once government-owned and managed PAL was long known to be in the financial red for a long time.

Under its current owners led by Filipino-Chinese businessman Lucio Tan, PAL had streamlined its operations and trimmed operational expenses.

At present, PAL continues to make adjustments to its flight schedules as it had been forced to trim down the number of its local as well as international flights.

Recently, President Benigno Aquino signed into law implementing guidelines targetted at opening domestic and international air routes to further competition under the so-called "open skies" policy.