Kenya Airways June pay to delay under travel curbs

Kenya Airways (KQ) will delay salaries for June amid a global slump in travel that continues to hurt the national carrier’s cash flow.

The airline on Thursday informed workers through e-mail of pay delay as the carrier struggles to meet the demands of its 3,652 workers that were on its payroll by December.

The International Air Transport Association (IATA) says that global air travel will not recover from the Covid-19 crisis until 2024 with the pandemic widening KQ’s losses to Sh36.2 billion in the year ended December.

“We would like to advise that there shall be a delay in the payment of June 2021 salaries. We shall endeavour to pay salaries by 9th July, 2021. The inconvenience caused is highly regrettable,” said the airline in an e-mail to staff.

The airline’s wage bill stood at Sh13.62 billion or Sh1.35 billion monthly in the year to December, down from Sh17 billion a year earlier.

At Sh13.62 billion, the wage bill accounted for a quarter of its Sh52.8 billion sales last year.

The share of wage bill stood at 13.2 percent of its Sh128.3 billion sales in 2019.

“To clarify, the salaries will be paid by 9th July….as we reorganise our funds,” said KQ in an e-mail response to the Business Daily.

“Covid-19 pandemic has severely impacted airline operations across the world and Kenya Airways is no exception.”

Kenya Airways last year received multibillion-shilling bailout from the government as part of efforts to prop up the carrier after the pandemic grounded global aviation.

The carrier in March said they will need at least $500 million (Sh54.87 billion) in bailouts to stay afloat in the next nine months as it navigates the turbulent aviation sector following collapse of air travel demand due to Covid-19.

Pay cuts

The development comes at a time the firm is yet to resume flights on some of its key routes as countries across the globe continue to impose new travel restrictions.

The airline in January effected a fresh round of pay cuts of up to 30 percent to preserve cash amid unrelenting financial challenges due to the Covid-19 pandemic.

The payroll cuts of between five percent and 30 percent were to remain for between six to 12 months, with a quarterly review of the proposed pay variation. The pay cuts have not been restored.

Staff exits, pay cuts and unpaid leaves saw KQ’s spending on employees hit a nine-year low of Sh13.62 billion, with the airline’s current headcount being the lowest in five years.

KQ’s net loss in the financial year to December nearly tripled to Sh36.2 billion — the highest ever in its history — joining other global airlines in losing revenue.