Kenya Airways #ticker:KQ (KQ) has released frozen pilot pay, shrugging off a row over the flyers' demand for reduced salary cut in the wake of business disruptions caused by Covid-19.
The Kenya Airline Pilots Association (Kalpa) — which represents about 414 KQ pilots — told the Business Daily Sunday that the airline paid pilots 70 percent of their March pay on April 2 and promised to clear the balance when the carrier returns to growth.
The national carrier had withheld the March pay, which is normally paid before 25th of every month, after the pilots demanded a smaller salary cut.
Kalpa wanted KQ to remit 95 percent of the pay, with only five per cent deferred, triggering a standoff.
"KQ wired our March pay on Friday, March 2, 2021. They paid us the 70 percent they had been insisting on," said Kalpa, adding that there was no consensus on the pay.
In a March 25 memo to the pilots, KQ director of operations, Paul Njoroge, said the pilots’ salaries for March would not be remitted until they dropped their demand for smaller cuts on their monthly take-home.
"Though management vividly explained to Kalpa the rationale of the proposed 70 percent salary payout to pilots and sought consent for payment, Kalpa maintained that pilots should be paid salaries at 95 percent and five percent owed," Mr Njoroge said in the Thursday memo seen by the Business Daily.
"Based on our current financial position, pilots’ salaries shall be delayed until when we receive a consent that is affordable."
The union has frozen KQ plans to cut up to 207 of the 414 pilots on the payroll last year over the next three years.
This has seen the pilots working for an average of 30 hours monthly compared to the legally set limit of 105 hours and normally acceptable productivity target of 72 hours following the coronavirus crisis that hit demand for travel.
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 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 in the country.
KQ says that its pilots have been earning millions of shillings despite working less than a third of the legally set flying hours.
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.
The situation has been made complex by the fact that the Kalpa has resisted plans by KQ to cut up to 207 of the 414 pilots on the carrier’s payroll last year.
Employees affiliated to 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 oto 22 percent of the payroll costs.
In January, KQ workers were put on pay cuts to preserve cash amid unrelenting financial challenges due to the Covid-19 pandemic.
The airline’s chief executive Allan Kilavuka said the new cost-cutting measure that was targeting workers earning Sh45,000 and above was aimed at keeping the company afloat.
The payroll cuts of between five percent and 30 percent took effect in January and were expected to remain for a period of between six to 12 months, with a quarterly review of the proposed pay variation.