KQ in pilots crisis as 55 flee to rivals in one year

Kenya Airways chief executive officer Sebastian Mikosz, chairman Michael Joseph and board advisor Mbuvi Ngunze during the airline’s EGM at KQ Pride Centre in Nairobi on August 7. PHOTO | SALATON NJAU | NMG

What you need to know:

  • Kenya Airways discloses loss of 89 pilots in two years, leaving the national carrier short of the recommended minimum
  • The national carrier had 434 pilots on its books at the end of March this year, 10 below the required number.
  • The pilots have been agitating for better pay and management changes in the airline.

Kenya Airways (KQ) #ticker:KQ lost a record 55 pilots last year, raising to nearly 100 the number of pilots who have exited the struggling national carrier in two years.

The exits left the national carrier operating below the optimum number of pilots needed for smooth flight operations, KQ says in its latest annual report.

The national carrier had 434 pilots on its books at the end of March this year, 10 below the required number.

This risks creating disruptions in flights given that a number of pilots are certified to fly only certain models of aircraft, exposing the carrier to manpower shortages when they go off duty.

The airline has been involved in protracted labour disputes with its pilots in the past two years, and has also suffered from poaching of talent by wealthy Middle East carriers that can afford to pay higher wages.

“During the period under review, we witnessed the highest number of pilot exit in the last five years of 55 and a cumulative exit of 89 for the last two years to close at 434 pilots against a requirement of 444.

"A total of 32 Captains and 19 First Officers checked out across the fleets,” says KQ in its annual report.

“The company plans to narrow the gap in pilot’s strength by recruiting qualified direct entry pilots from the Kenyan market.”

Better pay

The pilots, under their lobby Kenya Airline Pilots Association (Kalpa), have been agitating for better pay and management changes in the airline.

KQ is now headed by Polish national Sebastian Mikosz, who replaced Mbuvi Ngunze as CEO and MD from June 1.

At the end of July the pilots held a go-slow that saw them refuse to work while on their off-time, referred to as goodwill in the industry lingo, resulting in flight delays and cancellations across multiple routes.

They, however, entered into an agreement with KQ last month that will see them switch to a productivity-based pay system, which will increase the allowances they earn for extra hours worked.

The revised pay model under a new collective bargaining scheme kicks in from April next year. In the year to March 2017, KQ’s total staff count dropped by 288 to 3,582, the annual report shows.

At the same time the number of workers hired on contract basis — who are cheaper to retain — rose by 148 or 20 per cent to stand at 739, while JamboJet’s headcount increased from 35 to 54.

The drop in staff numbers is partly attributable to a retrenchment initiated by the company to cut wage costs, poaching by rival airlines and natural attrition.

Staff departures

KQ says that the staff rationalisation programme which was carried out in two phases in July 2016 and January this year accounted for 101 staff departures.

The airline has flagged the raids by Middle Eastern carriers as a threat to its performance, given that they target highly skilled ground crew and pilots.

More than 100 aeronautical engineers and technicians quit the national carrier for rival Middle East airlines last year, although replacements were also being hired.

As a result, KQ says it is reviewing the salaries of the technical staff in a bid to halt the exodus, which could yet put a strain on the efforts to cut the wage bill.

“In general, the poaching of staff by Middle Eastern airlines influenced aircraft serviceability and availability and crew shortage,” KQ says in the report.

“As a preventive measure the airline has put in place a team to investigate the root causes and solutions….some of the main efforts the operations department put in place, which have started bearing fruit during the last quarter of the period under review include review of salaries for the technical staff to stem attrition.”

Wage bill

The wage bill stood at Sh15.45 billion in the year ending March, down by Sh221 million from Sh15.67 billion the previous year.

KQ has been targeting a reduction of its wage bill as part of a wider cost cutting drive in a bid to return to profitability after having reported the worst losses by a listed firm in Kenya in 2015 and 2016.

These measures resulted in an improved bottom-line in the year ending March 2017 even as turnover fell during the financial year by Sh10 billion to Sh106 billion.

The airline posted a Sh10.2 billion loss for the year ended March, down from Sh26.2 billion the previous year.

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