Companies

KQ workers take fresh pay cuts in austerity move

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A KQ Dreamliner aircraft. FILE PHOTO | NMG

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Summary

  • The airline’s chief executive, Allan Kilavuka said in a memo addressed to staff Thursday the new cost-cutting measure, 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 take effect this month and will remain for a period of between six to 12 months, with a quarterly review of the proposed pay variation.

Employees of the national carrier, Kenya Airways face 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 airline’s chief executive, Allan Kilavuka said in a memo addressed to staff Thursday the new cost-cutting measure, 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 take effect this month and will remain for a period of between six to 12 months, with a quarterly review of the proposed pay variation.

“The proposed pay cuts range from a maximum of 30 percent and a minimum of 5 percent for earnings above 45, 000. We have also proposed that any staff across the network who earns the equivalent of less than 44,999 will have no  pay variation for now. The salary used to determine the pay ranges is your basic pay and al fixed allowance,” the memo obtained by the Business Daily said.

“The local currency amounts will be converted and fixed at the appropriate exchange rates for outstation staff.”

Mr Kiilavuka further indicated that the airline will not pay deferred salaries that have been accrued since last April.

“I must stress that we cannot pay these amounts, and further, we do not have a timeline when payment will be possible. Should our financial and ability to pay improve significantly, we will redeem the differed amounts,” said Mr Kilavuka.

“Our proposal, however, is that, as soon as we get a sustainable cash injection that can cover our overdues, we will, at that time, commence discussions on the payment of the deferred salaries. Similarly, should our financial situation and ability to pay improve significantly, we will redeem the deferred amounts.”

The Business Daily did not immediately get a comment from KQ on its latest austerity measures and the total amount owed to workers so far.

The development comes at a time when the firm is yet to resume flights in some of its key routes. KQ effected pay cuts for its top managers, including Mr Kilavuka, 10 months ago to preserve cash and cut costs.

The airline’s senior managers took a 25 percent pay cut while directors were told to work for free. The airline’s top executives earn less than Sh200 million annually against a total wage bill of Sh16 billion.

Analysts say that KQ could be setting the stage for deeper wage bill cuts in an environment where airlines are calling for State aid to avoid ruin.

The airline’s total costs are about Sh150 billion annually, indicating that major savings will likely come from reduction in staff numbers.

KQ’s net loss for the six months ended June 2020 widened by 67.3 percent to Sh14.33 billion on account of Covid-19 disruptions that led to grounding of flights.

During the period under review, passenger numbers dropped by 55.5 percent to 1.1 million in contrast with 2.4 million over the same period last year, hurting revenues.

The half-year loss was more than the annual losses that KQ has been posting for the last three years.