Kenya Airways yesterday started the latest round of sacking that will affect 38 employees as it struggles to remain afloat. The airline had sent home 80 employees last July following an earlier decision taken in March 2016 that about 600 of its staff would be axed, as part of multi-pronged approach to cut costs and achieve profitability.
Outgoing Managing Director Mbuvi Ngunze announced that the redundancies were declared beginning yesterday and that further job cuts are expected in the next phase. “After a lot of consultation the next phase of the process is now ready to be rolled out. There is never a perfect timing for such actions, and we will ensure that the process is handled within the values of our Airline,” Ngunze said in a statement.
Pilots and technicians survived the onslaught that targeted employees across all other departments in a “painful” staff rationalisation. Mr Ngunze acknowledged the financial difficulties that the airline is facing which have prompted the mass sackings over several phases.
“After implementation of Phase 1 of the restructuring process, we continued looking for opportunities for productivity and efficiency gains as well as upskilling within the business,” he added. He was optimistic that the restructuring that started two years ago, including disposal of idle aircraft, was bearing fruit.
KQ reported a Sh900 million operating profit for the first-half of the current financial year, even though the gains were wiped off by huge loan repayment costs to report a Sh4.8 billion after tax loss.
That was a much narrower loss compared to the nearly Sh12 billion lost in the previous year, to the relief of the management who have been roundly condemned as having run down the airline.
KQ has reported more than Sh55 billion in losses in the past two-and-half years, that has been attributed to a failed expansion plan. Retrenchment of the 38 workers is despite an agreement entered with the Kenya Aviation Workers Union (KAWU) that KQ would freeze further redundancies after the July sackings.
KAWU Secretary General Moss Ndiema announced that the lobby had secured the pact which the airline has disowned. Mr Ngunze who is set to exit the firm before March 31 – which also the date the airline’s financial year ends, was edged out by the powerful pilots’ lobby. The pilots had demanded his immediate removal in October and threatened a strike that was only called off in the last minute after an assurance was granted by State House that the MD and chairman Amb Dennis Awori would leave. Awori has since been replaced by former Safaricom Executive Michael Joseph, while the airline is currently searching for Ngunze’s successor. A decision taken by the firm to expand its fleet proved to be an expensive miscalculation ending with the delivery of several jets without routes to fly to.
Planes, as with the KQ situation, are typically bought through loans offered by financiers owing to the huge cost. Revenues generated by the aircraft are channeled to pay the loans but in the KQ’s scenario, several of the new planes remained grounded.
KQ has either leased or sold some of the planes to generate cash to meet its obligations.