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Idle KQ pilots make millions amid losses

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A Kenya Airways aircraft at JKIA. FILE PHOTO | NMG

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Summary

  • The workers union has frozen Kenya Airways (KQ) plans to cut up to 207 of the 414 pilots on the carrier’s payroll last year over the next three years.
  • This has seen the pilots to work for an average of 30 hours monthly compared to the legally set limit of 105 hours and normally acceptable target of 72 hours following the coronavirus crisis that hit demand for travel.
  • Although the pilots are currently being paid 70 percent of their salaries due to Covid-induced pay cuts, they are technically on full pay because the airline is expected to settle the balance once it returns to growth.

Kenya Airways’ #ticker:KQ pilots are earning millions of shillings despite working less than a third of the legally set flying hours amid a legal standoff that has blocked plans to lay off half of them.

The workers union has frozen Kenya Airways (KQ) plans to cut up to 207 of the 414 pilots on the carrier’s payroll last year over the next three years.

This has seen the pilots to work for an average of 30 hours monthly compared to the legally set limit of 105 hours and normally acceptable target of 72 hours following the coronavirus crisis that hit demand for travel.

Although the pilots are currently being paid 70 percent of their salaries due to Covid-induced pay cuts, they are technically on full pay because the airline is expected to settle the balance once it returns to growth.

KQ last year said the pilots account for 10 percent of the airline’s total workforce, but take home the equivalent of 45 percent of the overall pay to employees or Sh6.48 billion based on the carrier’s wage bill for the year to December.

This means that on average a KQ pilot costs the company Sh1.3 million, which matches the salaries and allowances of top chief executives of State-owned firms such as KenGen, Kenya-Re and Kenya Power.

“The pilots are currently averaging 30 hours a month while the normal productivity rate of pilots is 72 hours and the legal limit is 105 hours. That means that their productivity is less than 50 percent,” KQ said in an e-mail response to the Business Daily.

The carrier’s revenues plunged by more than half last year, as lockdown measures reduced passengers.

KQ expects its passenger business to recover from the impact of the Covid-19 pandemic in 2024.

This has reduced its need for pilots by at least half based on revenue projections.

“Based on our three-year projection, we will require 50 percent to 60 percent of pilots to efficiently support the reduced operations,” KQ chief executive Allan Kilavuka told the Business Daily earlier.

The airline has been involved in protracted court fights with its pilots and has also suffered from poaching of talent by wealthy Middle East carriers that can afford to pay higher wages, triggering a talent war that has made pilots among Kenya’s best-paid workers.

The number of KQ pilots dropped by 91 or 18 percent from 2014 to the end of 2019 when it provided a breakdown of its work force.

The airline’s fleet increased from 27 in 2010 to 45 in 2015 while pilot hires rose in tandem from 240 in 2006 to a peak of 523 in 2015 on the back of an aggressive expansion plan.

The pilots’ umbrella body, the Kenya Airline Pilots Association (Kalpa), has opposed the airline’s plans to shed jobs.

Employees in the Kenya Aviation Workers Union (KAWU) account for the majority of workforce at 65 percent but take home an estimated 30.5 percent of KQ’s payroll.

Managers at the airline are 22 percent of the workforce and draw compensation equivalent of 22 percent of the payroll costs. “We need to make the right decisions today for the sustainability of the business tomorrow, hence the decision to shrink now in order to grow in future and emerge on the other side of the crisis a leaner, more efficient airline,” Mr Kilavuka said.

The Covid-19 pandemic has depressed the global aviation industry, with African carriers alone expected to have lost $6 billion (Sh654 billion) last year in revenue.

But KQ was struggling long before the coronavirus outbreak, posting 2019 losses of almost Sh13 billion, from a loss of Sh7.5 billion in 2018.

It cut salaries by as much as 80 percent when the crisis started, and sought a government bailout to help it take care of running costs after it grounded its planes when Kenya stopped commercial passenger flights to curb the spread of the virus.

The government, which has a 48.9 percent stake in the airline, has budgeted Sh28 billion in cash assistance of which Sh6 billion had been disbursed by the end of last year.

KQ is doubling down on cargo following delayed recovery of the passenger business.

The airline is converting a second passenger Boeing 787 plane into a freighter to haul cargo from Europe, Asia and the Americas, having converted a similar plane earlier this year.