Kenya Airways has promised to clear a KES6.5-billion-shilling (USD53.4 million) backlog in deferred salaries by June 2023 to diffuse staff unrest at the airline, according to Chief People Officer Tom Shivo.
A four-day pilot strike that ended on November 9 was expected to have cost the airline KES300 million (USD2.4 million) a day, or KES1.2 billion (USD9.8 million).
After downing aircraft on November 5, the Kenya Airline Pilots Association (KALPA) on November 8 called off the strike, saying its members would resume duties first thing on November 9. This came after Kenya’s Employment and Labour Relations Court ordered pilots to resume work, resulting in KALPA withdrawing an October 19 notice of industrial action.
Kenya Airways Chief Executive Officer Allan Kilavuka earlier warned of a severe economic impact on different economic sectors of what he termed an “illegal” strike that was also “ill-timed and unnecessary” as it would impact the airline’s ability to recover and meet its obligations.
“At a minimum, the unlawful industrial action will cost Kenya Airways approximately KES300 million a day, translating to KES2.1 billion (USD17.2 million) in one week,” he warned in a statement. He said the industrial action negated strides Kenya Airways had made this year to improve its financial position following the Covid pandemic.
The airline has been under pressure over outstanding salaries. The backlog accumulated since April 2020 and in 2021, when the carrier was hit by travel restrictions imposed during the pandemic. “The outstanding amount in deferred salaries to workers is KES6.5 billion, and we expect to clear this by June 2023,” Shivo told Business Daily Africa. “It is important to note that of this amount, we have paid up to 40% to date.”
The airline last year opted to pay workers earning KES45,000 (USD370) or more monthly between 70%-95% of their monthly pay, promising to settle the balance once it offset accrued payments to lenders and suppliers in early 2023. KALPA, representing 414 Kenya Airways pilots, demanded the airline settle 100% of the pay.
Meanwhile, Nation newspaper reports that Kenya Airways has secured KES2.5 billion (USD20.5 million) in annual savings starting 2023 after negotiating 21% lower aircraft leases as it continues a restructuring programme to bring down its high-cost base, mainly high fleet ownership expenses. Kenya Airways targets an overall cost reduction of KES8 billion (USD6.5 million) or 10% of its total operating expenses of KES79.9 billion (USD656 million) in 2020.
Kilavuka said the airline was negotiating the return to lessors before the end of their contracts aircraft that were too expensive to maintain. “We are in the process of returning four (excess) aircraft,” he told the Nation. “We are also currently in the process of negotiating a termination of some of our wide-body aircraft, the B777s [being sub-leased to Turkish Airlines], which are extremely expensive for us to run. These were contracted in 2014, and we would like to terminate them because they are very expensive for us,” Kilavuka said.
The re-negotiated leases will help the carrier break even by 2024. “This will help the airline grow,” he said.
Source: Ch-Aviation
