State seeks to stop KQ pilots’ strike threat from derailing recovery plan

Sunday January 24 2016

Kenya Airways Chief Executive Officer Mbuvi Ngunze (right) at a past appearance with former Finance Director Alex Mbugua. The fresh row between pilots and Kenya Airways is threatening to derail the embattled airline’s quest to return to profitability. PHOTO | DIANA NGILA |

Kenya Airways Chief Executive Officer Mbuvi Ngunze (right) at a past appearance with former Finance Director Alex Mbugua. The fresh row between pilots and Kenya Airways is threatening to derail the embattled airline’s quest to return to profitability. PHOTO | DIANA NGILA |  NATION MEDIA GROUP

By VINCENT ACHUKA
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The fresh row between pilots and Kenya Airways is threatening to derail the embattled airline’s quest to return to profitability as it began implementing two ambitious restructuring plans aimed at boosting its financial chest by about Sh20 billion.

On Saturday, the government, which owns 29.8 percent of the airline shares, moved in to try and mediate between the two warring parties as it emerged that the pilots could effect a go slow next week.

This could lead to massive flight cancellations or delays that would require the airline to book travellers to hotels further increasing operating costs and dent its image.

On Wednesday, the pilots gave their CEO Mbuvi Ngunze and all the top directors seven days to resign “failure to which they will pursue other options to ensure a change in tide in the airlines operations.”

Transport Cabinet Secretary James Macharia told Sunday Nation that he had called for a crisis meeting with leaders of the Kenya Airlines Pilots Association (KALPA).

He assured that the changes they are demanding would be effected but not in one go.

“If the number two slot in the order of management has been changed, you can see we are already in the process of revamping management,” he said without being categorical whether Mr Nguze will be fired.

“But even as we do this we don’t want to aggravate an already bad situation because the process of restructuring cannot take place in a single day where you just come and say everyone drop your tools,” he said.

COTU BACKING

On Saturday the pilots’ got a backing from Central Organisation of Trade Unions (Cotu) with secretary general Francis Atwoli terming the airlines management as incompetent.

“The top management lacks the necessary skills to rescue the airline and even with the government’s efforts the national airline will be no more soon unless the top management and board pave way for an overhaul,” he said.

The management which has been blamed for poor decisions that led to the airline posting a record loss of Sh25.7 billion last year has stayed put despite a Senate committee report that called for their immediate sacking.

Among the poor decisions outlined in the report is the lack of foresight in the ambitious Mawingu expansion project, cultivating a problematic human resource policy and bad decisions on leasing of aircrafts.

But in what has been a busy week for the national carrier, KQ fired its Group Finance Director Alex Mbugua, sold two planes and made changes in its board by replacing Mr Nduva Muli with Mr Irungu Nyakera the Principal Secretary Transport.

The changes are part of a 24-item strategic plan drafted in November last year by American consulting firm McKinsey which involves job cuts, cost reduction, pricing and productivity improvement.

The airline is also in the process of evaluating its sales, ticketing, and network planning and revenue management with the assistance of another American consulting firm Seabury.

The two Boeing 777-200 aircraft that were sold on Tuesday to American Airline Omni Air International through British Aircraft Abot Aviation are part of a plan to shrink KQ’s fleet size from 52 to 45.

The airline was expecting Sh14.6 billion from sale of 30 acres of land in Embakasi and four Boeing 777-200 ER aircraft which Abot was contracted to sell.

The real estate deal which is expected to be complete by the end of this month is expected to generate another Sh2.2 billion for the airline.

The airline, whose total negative equity position stood at a staggering Sh33.9 billion by the end of last year is also in the process of cutting down its 3,900 workforce which as at last year was said to cost the NSE-listed firm Sh17 billion every year in salaries.

PLANES DISPOSAL

KQ’s pilots and cabin crew accepted a pay cut and a freeze on pay rise last year until the airline returns to profitability but KALPA has been against the sale of aircraft for fear of job losses.

In October, they lost their quest to freeze the disposal of planes after High Court Judge Monicah Mbaru ruled that the sale of planes has no direct bearing on the pilot’s employment status.

“Steering Kenya Airways back to prosperity should be a top-most priority for all the airline’s stakeholders. 

Superficial changes within the current management defy any logic, and at best retain a status quo,” said KALPA’s CEO Paul Gichinga.

By Saturday the airline had not responsed to KALPA’s demands and declined to respond to our queries.

The Transport CS, however, appealed to the pilots to support the airline.

“They should support the airline in this difficult time because if it goes down, they will be the biggest losers,” he said.