Job cuts loom as KQ flies into new storm
Posted Friday, August 3 2012 at 19:30
- Airline to cut staff over huge wage bill, declining passengers, profit and rising fuel costs
More than 1,800 Kenya Airways employees could be sent home as the airline seeks to reduce its wage bill.
This comes just days after the airline outsourced cabin crew on the yet to be launched low-cost subsidiary, Jambo Jet. This could see the airline fly into trouble with unions.
The airline said the plan to lay off an undisclosed number of staff has started, first with volunteers who want to retire, to be followed by redundancies. Over 37 per cent of the staff will leave.
“Despite various initiatives that we have put in place, our cost base continues to be extremely high. This, coupled with other direct operating costs, have put pressure on our profits,” Kenya Airways chief executive Titus Naikuni said.
Alhough the airline did not disclose the number of people who will be retrenched, analysts estimate that this will be up to 1,800.
The actual figure will be known by the end of this month, ahead of the first half results.
A report by Renaissance Capital says the airline has more employees than the industry benchmark, in relation to the number of passengers it carries.
The benchmark is 1,000 employees for every one million passengers a year. The total number of the airlines employees at the end of the last financial year stood at 4,834 meaning that was 1,800 employees. The airline carried about three million passengers last year.
Mr Naikuni said the decision, made by the airline’s board of directors was taking a long term view of the airline in a harsh operating environment, fewer passengers, declining revenues, unstable fuel prices and stiff competition.
Dr Naikuni said the airline’s employment costs have more than doubled over the past six years, from Sh6 billion in 2007 to Sh13.4 billion in 2012.
The number of Kenyan employees has grown from 3,729 to 4,170 during the same period, while the number of overseas employees rose from 425 to 664.
Some jobs will be declared redundant and others will be outsourced.
The airline maintained that it has adhered to the provisions of the Employment Act and has issued one month notice to the unions, the Ministry of Labour and the employees.
An employee assistance programme has been in put in place to help those who choose to retire early, the airline said.
The assistance includes access to professional counselling and debrief sessions. A career planning and training sessions will be organised for all employees leaving the company,” the airline said.