Kenya Airways CEO Titus Naikuni. MP have questioned the role of the Permanent Secretary in the board of Kenya Airways if he could not protect Kenyans from being laid off en masse. Photo/FILE
What you need to know:
PS questioned on why the government allowed Kenya Airways management to sack hundreds of the airline's employees.
The PS said that airlines across the world are faced with difficult business environment and that it was prudent to cut costs.
Analysts say that stake of the government is below 51 per cent and therefore all the decisions made by the board must be to the benefit of shareholders.
Transport Permanent Secretary Cyrus Njiru came under fire on Tuesday in a heated exchange of words with a parliamentary committee over Kenya Airways management's decision to sack hundreds of its employees.
The Parliamentary Committee for Labour and Social Welfare chaired by the nominated MP Sofia Abdi Noor wanted to know the role of the Permanent Secretary in the board of Kenya Airways if he could not protect Kenyans from being laid off en masse.
The PS however said the stake of the government was insignificant to give the ministry any powers in decision making, adding that the management had a right to take decisions to protect the company’s profitability
The listed airline is 29.8 per cent government-owned and 26.7 per cent owned by the Dutch airline KLM.
The PS said that airlines across the world are faced with difficult business environment and that it was prudent to cut costs.
The MPs decided not to take any answers from the PS after they felt that he was not responding appropriately to the answers and sent him away to bring the Transport minister.
Kenya Airways said a total of 578 left the company with 125 volunteering to go on early retirement. This means that 453 employees were declared redundant.
Analysts say that stake of the government is below 51 per cent and therefore all the decisions made by the board must be to the benefit of shareholders.
“This puts the permanent secretary in a tricky situation because he cannot do much,” said Peter Wanyama, an advocate of the High Court.
The company said its staff costs per year are about Sh13.2 billion while fuel accounts for Sh40 billion.
The number of Kenyan employees had grown from 3,729 to 4,170 during the same period, while the number of overseas employees rose from 425 to 664.
The exercise started on August 1, 2012 owing to what the airline said was the large increase in headcount in 2011/12, contributing to significant annual staff salary increments.
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