Companies

Kenya Airways staff to remain on pay cut

KQ

A Kenya Airways plane at the JKIA in Nairobi. FILE PHOTO | NMG

geraldandae

Summary

  • The airline in a response to the Business Daily queries Tuesday said employee full salaries would not be restored within several months to come.
  • KQ workers in January took a fresh round of pay cuts of up to 30 percent to preserve cash.

Employees of the national carrier, Kenya Airways (KQ) will remain on pay cuts at least in the short-term as part of cost cutting measures aimed at preserving cash amid unrelenting Covid-19 woes.

The airline in a response to the Business Daily queries Tuesday said employee full salaries would not be restored within several months to come, dealing a blow to the workers.

“The operating environment since the outbreak of Covid-19 remains the same and any changes shall only be done when the situation improves,” the airline said in reference to employee pay cuts.

KQ workers in January took a fresh round of pay cuts of up to 30 percent to preserve cash.

The airline’s chief executive, Allan Kilavuka said then in a memo addressed to staff that the cost-cutting measure, which was aimed at keeping the company afloat during this difficult time, will target workers earning Sh45,000 and above.

The payroll cuts of between five percent and 30 percent took effect in January and were to remain for a period of between six to 12 months, with a quarterly review of the proposed pay variation.

The development comes at a time when the firm is eyeing a fresh bailout from the government to steady its operations despite narrowing its half-year loss by a fifth.

The airline posted a Sh11.49 billion net loss in the six months ended June— a 19.8 percent cut from the Sh14.33 billion loss it incurred in the preceding similar period, taking its accumulated losses over the years to above Sh127 billion.

KQ says the long recovery prospects and diminishing revenue in an environment of increased costs due to tight health and safety measures mean it will require a bailout to stay afloat.

“The financial situation of the company is precarious. We are in a negative equity position, which means we are insolvent as an organisation, obviously made worse by the pandemic,” Mr Kilavuka said when he released the company’s financial results two weeks ago.

“Definitely the company needs financial support and this is not a secret. We still need financial support from our principals or elsewhere.”