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Economy

Inside State House deal that helped avert KQ pilots strike

Sources say President Uhuru Kenyatta’s chief of staff, Joseph Kinyua promised the Kenya Airline Pilots Association (Kalpa) prompt action against top KQ officials. PHOTO | FILE
Sources say President Uhuru Kenyatta’s chief of staff, Joseph Kinyua promised the Kenya Airline Pilots Association (Kalpa) prompt action against top KQ officials. PHOTO | FILE  Nation Media Group

National carrier Kenya Airways escaped a potentially crippling pilots’ strike after State House waded into the dispute and promised that some big heads will roll by end of month.

People familiar with the negotiations said the pilots only agreed to suspend the industrial action after the government, which is an anchor shareholder in the airline, committed to overhaul the airline’s management — meaning senior KQ managers may be asked to leave.

A source who attended the negotiations told the Business Daily that President Uhuru Kenyatta’s chief of staff, Joseph Kinyua, promised the Kenya Airline Pilots Association (Kalpa) prompt action against top KQ officials named in an audit report as being responsible for the airline’s troubles.

It was announced at a Press conference at KICC, Nairobi, late evening that former Safaricom CEO Michael Joseph would take over as KQ chairman.

KQ pilots have demanded the exit of the airline’s chief executive, Mbuvi Ngunze, and chairman Dennis Awori, accusing the duo of presiding over the mismanagement of the publicly-listed firm, leaving it desperate for a bailout to the tune of Sh60 billion.

Mr Kinyua and Solicitor-General Njee Muturi were said to have initially met the Kalpa leadership at State House Nairobi on Sunday evening and followed up with two meetings on Monday morning at two Nairobi hotels.

State House’s intervention came just a day before the pilots’ strike and sought to save the carrier — which is 29.8 per cent government-owned — from losing hundreds of millions of shillings in revenue.

Mr Kinyua’s promise follows Transport secretary James Macharia’s assurance last week that action would be taken against those named in the audit report prepared by consulting firm Deloitte.

“In light of the fruitful discussions held between Kalpa’s executive council and the government, we have taken the decision to defer the strike action to accommodate the ongoing negotiations,” said the Kalpa secretary-general Paul Gichinga.

Yesterday, Kalpa said in a statement that it was not retreating from the strike but had decided to give dialogue a chance.

“We emphasise that we are not retreating from our initial position — change for Kenya Airways can only be achieved with an overhaul in leadership. We also wish to confirm that as an association with heavily vested interest in Kenya Airways, we remain committed to contributing in every meaningful way to the airline’s recovery and transformation,” the pilots said in the statement. 

Kalpa’s list of bad managerial decisions that cost KQ billions of shillings includes costly agreements with travel agents, the alleged sale of aircraft at throwaway prices and irregular leasing of others without proper documentation.

The pilots also opposed the management’s decision to sell prime London parking slots that were at the core of KQ’s attractiveness to London-bound business travellers and continued stay in an unprofitable relationship with Dutch carrier KLM.

KLM owns 26.7 per cent of KQ.

Mr Kinyua’s promise, which prompted the pilots’ decision to defer the strike, is part of the government’s concerted effort to avert the industrial action, which was announced a week ago.

Kalpa, a union made up of approximately 450 pilots, had vowed not to fly Kenya Airways fleet of 36 planes if the airline’s chief executive and chairman did not resign by end of day October 17 (yesterday).

The pilots’ resolve to down their tools came despite a court order outlawing the strike and Mr Macharia’s warning that the government would pursue all legal options over what he termed “economic and national sabotage.”

On Friday, Labour secretary Phyllis Kandie formed a five-member Conciliatory Committee to help prevent the planned strike. A similar strike in April cost KQ Sh200 million in just one day.

The committee, which met Monday, included three government officials, representatives of the Central Organisation of Trade Unions (COTU) and the Federation of Kenya Employers (FKE).

Mr Ngunze did not attend the meeting.

Mr Awori last week told the Financial Times that he will exit his position by end of year — a move that meets part of the pilots’ demands.

But even as the negotiations with pilots were bearing fruit, KQ’s contracted staff, who have been on a go-slow since Friday, were yet to reach an agreement with their employer Career Directions.

The employees, who number about 400, have been demanding permanent and pensionable terms with KQ, including salaries, insurance policies and allowances.

Career Directions managing director Lucy Mmari told the Business Daily that the company was still trying to reach a provisional agreement with the employees to enable them resume work.

“What we’ve not agreed upon is how much time there will be between when they go back to work and when we come to an agreement on the new terms,” she said, adding that the company would not rule out disciplinary action until the negotiations were complete.

On Sunday, the company threatened to move against staff who had absconded duty and ordered them to appear for hearings at the its headquarters.

“Note that management may, your response not-withstanding, take any appropriate disciplinary action against you,” the letter said.

KQ has about 1,000 sub-contracted and non-unionised staff. 

The airline’s management last week said it could be forced to stop selling tickets on its network if the strike is not called off “given the costs associated with selling tickets and not carrying these passengers”.

The decision to defer the strike for an unspecified duration of time will therefore give KQ much-needed reprieve.

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