CPA prefers pay cuts over layoffs

Posted on Feb 08 1999

The Commonwealth Ports Authority board is eyeing a 15 percent reduction in salaries of employees for one to two years instead of cutting down by half the present number of its workforce.

According to Roman A. Palacios, board chairman, the ports authority may have to reduce the working hours from 40 to 32 hours per week. “I believe that if we do that, we can still run the agency efficiently,” he said.

Furthermore, the ports authority may reduce by 50 percent the medical benefits it is giving to employees.

More than 50 percent of CPA’s $11 million budget goes to salaries and wages of employees alone. The number of employees of CPA shot up to 250 from a low of 167 in 1994.

Although the ports authority has been successfully carrying out various cost-cutting measures since late 1997, Palacios said management is under pressure to save more money amid diminishing revenue to be able to pay for its financial obligations.

Due to mounting pressure from various sectors, the ports authority is also looking at the possibility of deferring for at least one year the planned airport rate increase.

However, this means that CPA will have to seek financial assistance from Gov. Pedro P. Tenorio and the Legislature so that it can repay its debt or look for other sources of funds so that it can meet the required 125 percent debt service.

“Maybe the government can help us survive the crisis for at least a year. We have no one else to turn to,” said Palacios.

Airline executives who met with CPA officials last week raised strong objections to the planned rate hike citing the downtrend in tourist arrivals as a result of the financial crisis in Asia.

Likewise, the Marianas Visitors Authority has expressed concern on the effect of the planned airport rate increase on its efforts to revive the ailing tourism economy.

The raising of airport fees was one of the conditions imposed by the rating agencies before it can rate the bond. Without any rating before March 1999, the interest rate for the airport bond will increase from 6.25 percent to 6.70 percent.

Visitor arrivals would have to increase by 740,000 by the end of the year so that the ports authority can raise the needed revenue to meet debt service requirement.

A study conducted by airport consultant Ricondo & Associates revealed that aviation with only experience a 4.5 percent growth this year due to the effects of Asia’s financial crisis.

As a result, it is necessary for CPA to increase its passenger facility charge by 39 percent from $5.79 to $8.00 per passenger and a 65 percent hike of the landing fee from $.85 to $1.40.

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