National carrier Kenya Airways yesterday flew deeper into a storm after its pilots made public a litany of bad management decisions they believe pulled the airline to its current loss-making position.
Speaking through the Kenya Airline Pilots Association (Kalpa), the more than 400 pilots said gross mismanagement and fraud have cost the company billions of shilling in the recent past, insisting that any recovery effort led by chief executive officer Mbuvi Ngunze was bound to fail as the same management is responsible for its failure.
The pilots warned that they would ground the airline’s operations to a halt if Mr Ngunze does not leave office by midday Thursday.
Kalpa’s list of bad decisions that cost KQ billions of shillings in recent years includes costly agreements the airline entered with travel agents, the sale of aircraft at throwaway prices and irregular leasing of others without securing proper documentation.
The pilots also criticised the airline’s management for selling prime London parking slots that were at the core of KQ’s attractiveness to London-bound business travellers as well as staying in an unprofitable relationship with Dutch carrier KLM.
Captain Paul Gichinga, Kalpa’s secretary-general, said the bad decisions by the KQ management had cost it billions of shillings in the past five years, leaving it with record losses.
The pilots promised not to fly KQ’s 30 aircraft beginning midday Thursday unless Mr Ngunze resigns — a move that would cause mass flight cancellations and undermine recovery efforts.
“This will not be a go-slow. It will be all tools down. If the notice lapses without our demands being met, no KQ aircraft will be airborne beginning 12 p.m. on Thursday,” Mr Gichinga said.
The pilots blamed the carrier’s failure to meet its revenue targets in recent years and losses posted since 2013 on the management’s “incompetence”.
Mr Gichinga said the decision by the KQ commercial director in 2011 to sign questionable agreements with unnamed travel agents is the reason the airline’s revenues have been falling.
Kalpa said the agreements, which remain in force in force, have so far cost the airline Sh100 billion in the sale of tickets at heavily discounted rates and uncollected revenues from the agents.
“Some agents are allowed to sell tickets at promotional rates to at least 60 per cent of the cabin. However, they sell the tickets at much higher prices and pocket the difference causing revenue shortfalls,” said Mr Gichinga.
Kalpa accused the KQ management of failing to collect more than Sh370 million that an unnamed travel agent in Congo Kinshasa has not remitted over a three-year period.
The pilots further claimed that the national carrier had diverted some its cargo business “to a local freighter company” they say is “highly suspected to be owned by former KQ employees.”
KQ recently hired American consultancy McKinsey to help restructure its operations as it sank deeper into the red, with a Sh11.95 billion net loss for the six months to September, compared with Sh10.45 billion in 2014.
The restructuring is expected to boost KQ’s bottom-line by about Sh20 billion, adding to the Sh14.6 billion it hopes to make from the sale of assets, including aircraft.
KQ has sold two Boeing B777-200 planes to Oklahoma-based Omni Air International for an undisclosed amount, which the pilots claimed was not more than Sh500 million, a small fraction of their acquisition price.
The airline recently received Sh5.3 billion after selling its London Heathrow Airport slot and has leased out three Boeing 377-300 to Turkish Airlines in an arrangement Kalpa said was made without involving KQ’s procurement department.
The pilots are now questioning the wisdom of decisions such as selling the airline’s “most valuable assets in order to recover to a profit position”.
“London accounts for 10 per cent of KQ’s revenue and with the sale of the slots, it will take more than a miracle to maintain the revenue stream,” Mr Gichinga said.
KQ responded to the strike notice Tuesday evening by issuing a press statement describing it as unlawful “as it is in violation of the required minimum period of seven days”.
The airline steered clear of addressing the issues raised by its pilots, noting that the parties were scheduled to have a meeting on the same day the industrial action is expected to begin.
KQ said it has held three meetings each with Kalpa and Kenya Aviation Workers Union (Kawu) both of which had “not hit a deadlock”.
“We are surprised and consider it the height of insincerity, bad faith and an act of economic sabotage for Kalpa to allege to issue a strike notice knowing fully well the current challenging business environment facing the airline and also in light of the ongoing consultations,” KQ said in the statement.
The pilots’ union last issued a strike notice in January but were impressed upon by the Transport ministry and the KQ board to shelve it to pave the way for consultations.