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Be
positive and be happy. This is the management philosophy
of Philippine Airlines (PAL) president and chief
operating officer Jaime J. Bautista.
At first
glance, initial observers would be surprised of
Bautista’s management mantra expecting a more serious
statement. But Bautista believes his style has helped
him in tackling the rehabilitation of PAL when the Tan
group of companies led by its chairman Dr. Lucio Tan
decided to take over the management of Asia’s first air
carrier.
“To me
being positive is the right attitude. I believe all the
difficulties are offset by the success of the airline
and when we have improved the operations of the
airline,” Bautista pointed out in an interview.
The cool
and mild-mannered executive revealed there’s a bit of
difference working with PAL as compared to the other
subsidiaries of the Tan group because basically it is a
service-oriented company.
“Being a
service company we are operating 24/7 and also working
24/7. That’s why cellular phone is open 24 hours; I
don’t turn it off because somebody might call, complain,
and ask information,” explained Bautista.
Bautista
joined PAL at an “interesting” time, he said. It was
right after its privatization, although the airline was
also operating inefficiently.
However,
Tan, Bautista and the other executives remained unfazed
by the gargantuan task and immediately buckled down to
work. The group immediately sought to identify the main
causes of inefficiencies.
They
found out that operating planes of different types,
engines and configurations was among the main causes why
the company was bleeding.
For
instance, PAL then had 12 Boeing 747-200 jets. However,
this huge aircraft had different engine types. Some were
powered by General Electric, the others by Pratt and
Whitney. Furthermore, they had different configurations.
Some were 370 feet, the others 380 feet and 390 feet.
“We
slowly retired these airplanes and started to pursue a
re-fleeting program so we ordered airplanes that we
operate now,” said Bautista.
PAL
reduced its total number of aircraft almost into half
from 60 to 32 airplanes. It also chose to operate one
type of 747 powered by a GE engine and also added an
Airbus 340 to its fleet.
“Being a
new player in the industry, Dr. Tan aimed to change PAL
into a company that would be more efficient. The first
thing he did was to implement a re-fleeting program,
which would entail the retirement of the unwanted
airplanes and operate a few types of airplanes,”
Bautista explained.
The
refleeting program would result in savings in terms of
training maintenance personnel as they would have to
focus on a smaller number of aircraft. This would result
in less manpower, inventories and expenses.
Bautista
and the group also transformed PAL into a leaner and
more efficient organization by reducing its staff from
15,000 to 7,500 through a voluntary separation program.
PAL also
stopped flying to unprofitable routes, From 36
international destinations it now has only 24
international flights focused on the United States,
Japan, Asia and Australia. At the same time, domestic
flights have been reduced to 12 from 35.
“That
was part of the plan. What really contributed to the
profitability of PAL was when it stopped flying to
London, Frankfurt, Paris, Amsterdam, Rome, Madrid and
other parts of Europe,” said Bautista.
Yet
despite such cost-cutting moves, Bautista stressed there
was no abrupt change in terms of instituting a new work
culture when they took over the company.
Looking back
Reminiscing on the takeover, Bautista said he and his
colleagues were a bit shocked when the man popularly
known in the business circles as Kapitan decided to buy
a losing entity like PAL.
“It was
a big challenge for the group buying a losing company
because his companies were profitable. Then came PAL, a
company which was losing money,” he recalled.
But Tan
told them he was committed to play white knight to help
save the airline
“He told
us he is returning the favor for being in the
Philippines. He told us he is very fortunate to be
living in the
Philippines.
He earned his fortune in the Philippines and one way of
returning the favor is by making this airline an
efficient airline that will serve the transport
requirements of the Filipinos,” said Bautista, who
joined PAL as vice president comptroller in April 1993.
The road
to recovery was a bumpy one as PAL had to deal with
different problems. In the first year of rehabilitation
in 1994, PAL earned a paltry income of $1 million.
However,
PAL managed to slowly recover in the succeeding years as
the country’s economy also improved.
But when
the Asian financial crisis struck, PAL’s road to
recovery seemed to hit a dead-end. This was exacerbated
when the pilots staged a strike.
“We
defaulted in the payment of our obligations. We filed
for a restructuring and rehabilitation. As the chief
financial officer, I led the rehabilitation team to
restructure our debts,” Bautista narrated.
But the
creditors rejected the plan because its equity
investment of $50 million was deemed too small. “But
knowing the market, we know it was enough. However, the
creditors wanted $200 million,” Bautista pointed out.
In June
1999, Tan came to the rescue and infused a fresh equity
of $200 million, which still remains intact. “Whenever
we are meeting with our creditors, we tell them we don’t
need that $200 million. We tell that’s how Mr. Tan is
committed to make this airline fly,” Bautista stressed.
That
started another round of recovery for PAL, but
unfortunately was again met with challenges beyond its
control such as the September 11, 2001 terrorist attacks
in the US and the severe acute respiratory syndrome (SARS)
epidemic.
Nevertheless, PAL managed to hurdle these problems and
is now moving towards full recovery.
From its
notorious moniker of “plane always late,” Bautista said
PAL’s domestic and international flights have been
operating on international standards. “We are better
than many international airlines because we are
exceeding the performance standards set by the
International Air Travel Association,” he
boasted.
Lessons from Kapitan
Just
like his mentor, Bautista is also a hands-on manager. He
squeezes his precious time to visit all the PAL stations
in the country and talk with employees on the various
issues affecting the company.
He also
asks them to contribute their suggestions and
recommendations for the improvement of the working
environment in the company.
“The
morale of the people in PAL is high. We see to it
people are informed on the latest issues in the company.
We are also very transparent and conduct regular
dialogue with the people,” he said.
“I tell
them if PAL is making or losing money, hitting or
missing their targets. I also tell the issues and
problems and ask them to be part of the solution,” added
Bautista, who became the chief of PAL in 2004.
Now on
his 27th year with the Tan group of companies, Bautista
said he has learned valuable lessons from Tan on
management. For one, he said he learned from Tan the
value of being a hands-on executive.
“We are
like one big family here. We stick together during
challenging and the good times,” Bautista said. |
