MANILA, Aug 27 (Reuters) - Flag carrier Philippine Airlines (PAL) may slash more than a third of its 8,000-strong workforce and outsource parts of the business to cope with a sharp decline in travel demand, its president said on Thursday.
The airline industry is one of the sectors hardest hit by the global recession, even as the world economy shows signs of recovery, although the International Air Transport Association (IATA) said on Thursday that its latest data point to a recovery in air traffic.
"Extraordinary times call for extraordinary measures," Jaime Bautista said in a statement. "We want to make PAL lean and mean so it will be agile and flexible enough to adapt to the new economic climate."
Asked if PAL was looking at cutting its workforce to around 5,000, Bautista told Reuters: "It's possible, or even more."
"It will be a substantial number of employees that will be covered by the rationalisation programme," he said.
The International Air Transport Association predicted in June that losses of airlines will widen to $9 billion this year from $8.5 billion in 2008 due to high fuel prices and weak demand.
A subsidiary of listed firm PAL Holdings Inc, Philippine Airlines is controlled by Lucio Tan, one of the country's richest men with interests in tobacco, banking, brewery and liquor.
PAL incurred a $301.4 million net loss for its 2008-2009 fiscal year ended March and Bautista said the carrier "will be happy" if it breaks even in the current fiscal year.
"But based on the results of operations for the first three months (of the 2009-2010 fiscal year), traffic remains weak," he said.
To trim costs, Bautista said the airline is planning to transfer several operations to third parties.
"We are considering outsourcing the non-core business of PAL ... like catering, reservation, just like what other airlines are doing," he said.
"We are one of the few Asian carriers that still do our own catering and ground handling.
PAL is also planning to reduce its total international flight frequencies by 7 percent and will cut flights to the United States, Canada and Australia amid poor demand, said Bautista. (Reporting by Manolo Serapio Jr.; Editing by Rosemarie Francisco and Jon Loades-Carter)