Costly action that KQ has to bear in dispute with engineers

NAIROBI, KENYA: Kenya Airways (KQ) might pay more than Sh200 million to some of its employees while deriving no value from them by the end of this year.

The national carrier is currently paying 80 employees from its technical department their full salaries while they while their time away at home.

This is expected to go on for the coming months until a court case pitting the airline against the staff, who include engineers, is heard and determined.

The saga started November last year when some staff from the technical department went on strike demanding better pay and terms.

Such technicians and engineers are critical to the airline’s operations

The airline however said the strike was illegal and dismissed the employees, after warning them three times.

The engineers then went to court, which ordered KQ to reinstate them pending hearing of the case they had filed. The airline reinstated them but added a twist to it by sending them on compulsory leave.

KQ, in an attempt to prove that it will not put up with rebel employees, has since December been paying them despite them not offering any service to the company.

Earlier reports had indicated that there were over 200 employees who were affected but the airline on Friday said there were 80 staff who are currently on leave and receiving their dues.

KQ Chief Executive Sebastian Mikosz said the money that will be paid to the employees would add up to millions of dollars by the time normalcy returns. Despite the high cost, Mr Mikosz said he would not take them back until the hearing is completed - when a decision is made.

He believes what the workers did was in bad faith and outside mechanisms laid down to deal with grievances.

“They went on an illegal strike so we terminated their contracts. They went to court, which reinstated them temporarily. So we took them back but we are now paying them salaries to stay at home... they are on leave now,” he said.

“It is a big cost for us because we have 80 people sitting at home and getting paid. The cost runs in the millions of dollars.”

While Mikosz did not disclose the exact figure, computations based on the salaries that the airline paid its staff last year shows that the company could spend in excess of Sh200 million ($2 million) on the 80 technicians and engineers this year.

According to its annual report, KQ paid Sh9 billion to its 3,548 employees on its payroll. This translates to an average monthly salary of about Sh282,000 per employee.

Pooled together, the employees that have been sent on the indefinite compulsory leave could be making Sh22 million per month or Sh270 million annually.

The absence of the employees, according to Mikosz, has been a strain to the rest of the team.

The airline has however not hired new technicians and engineers.

It has instead coped with the situation due to efforts put in place earlier that ensured operations continued uninterrupted using the remaining staff. The technical department had a human resource headcount of 600.

“We had enough people to take over and we are continuing our operations normally. We did not hire anyone,” he said.

Mikosz, who has twice steered Polish Airlines out of turbulence in the past, wants to manage costs and this could explain why he has not hired new personnel but instead opted to sweat the resources at his disposal.

This is especially against the background of the turnaround strategy that KQ is implementing.

Mikosz believes that the suspended employees made an error in judgement in attempting to armtwist the management into raising their salaries.

“They did a very wrong assessment that they could run the company, go on an illegal strike and the management would not react,” he said.

“They made a decision to go on strike… I am just trying to manage the company and not be managed. “ Despite the tough stance, he said KQ “is a good employer and we pay good salaries with a lot of benefits”.

While the technicians and engineers may have misread Mikosz, the airline’s pilots and members of cabin crew appear to have towed the line.

The two clusters of employees have in the past engaged in regular industrial action agitating for pay rise and better working conditions.

They have in past almost grounded the airline’s operations, resulting in flight delays and cancellations and in turn revenue loss for the airline.

For more than an year now, there has been an unusual lull as the employees refrain from industrial action.

Mikosz attributed this to diplomatic relations between management and the pilots as well as members of cabin crew.

“We did not have a particular agreement…we just talked to each other. What we put across to them was that they have to start trusting the management and that we are looking after the growth of the business. If they want to have better working conditions in future, we have to take care of the growth first,” he said.

“It is also the moment that we should be looking at the overall benefit of the company and not at individual interests and if in the future they want to grow in careers and salaries, that’s much smarter than to go and fight for a few shillings now and run into problems later.”

The airline is also unlikely to revise upwards the salaries of all employees.

“I am firm on that because it was required by shareholders and the banks will not agree on the increase of employee costs especially without huge gains in productivity,” said Mikosz.