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CPA says layoffs plan on track
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Posted on Feb 22 1999
The Commonwealth Ports Authority will begin drawing up plans to layoff employees and cut down working hours as an alternative to the raising of airport fees, said board chairman Roman S. Palacios.
Although the ports authority has not officially made a decision on whether or not it will throw out its plan to increase the airport fees, it is under pressure by various airlines to reduce its workforce.
Palacios said the plan may cover a reduction in working hours from 40 to 32 hours per week without jeopardizing the services at the airport and seaport. He said the airport committee headed by Roman Tudela will also look at the possibility of cutting down by 50 percent the medical benefits CPA is giving to its employees.
Amid mounting pressure from various sectors to defer the planned airport fee hike, the cash-strapped ports authority is now considering the possibility of suspending for at least one year its implementation.
But this means CPA would have to find ways to raise the needed funds to pay for its financial obligations especially meet debt service for its $53 million bond.
The raising of airport fees was also part of the condition imposed by the two rating agencies — Fitch IBCA and Standard & Poor’s — before giving any rating to the bond. Without any rating before March 1999 would result an increase in interest rate for the airport bond from 6.25 percent to 6.70 percent.
As a result of the continuous downtrend of visitor arrivals, the island’s tourism economy has suffered forcing many business to close shop. A study conducted by airport consultant Ricondo & Associates revealed that the aviation sector will only experience a 4.5 percent growth this year due to the effects if Asia’s financial crisis.
The ports authority plans to increase its passenger facility charge by 39 percent from $5.79 to $8.00 per passenger and a 65 percent hike on the landing fee from $0.85 to $1.40.
Gov. Pedro P. Tenorio has already ruled out any financial support to the ports authority in exchange for the deferment of any increase in fees because the CNMI government has its own financial problems to solve.
