KQ sacks 650 staff in plan to fly out of financial turbulence
Wednesday, July 29th, 2020
- The airline, being readied for nationalisation, has been in the throes of financial headwinds, with Kilavuka informing shareholders of a Sh 50 billion revenue shortfall by year end owing to Covid-19 shocks.
- Company reported a gross loss of 12.98 billion, a 71 per cent further drop compared to Sh7.55 billion loss the previous year, attributing it to an increase in operating costs that grew by 12.4 per cent to Sh129.1 billion compared to Sh114.8 billion in 2018.
Troubled national carrier, Kenya Airways has laid off 650 employees as the airline moves to streamline operations, to cushion the airline’s bottom line.
In what will be a bloodbath when the airline is done with the right-sizing process, the CEO Allan Kilavuka says in a letter to staff that, this is a necessary journey to support the long term survival of the airline.
The airline resumed domestic passenger services on July 15 with reduced operations, with expected resumption of international flights later this week.
“As I have shared with you before, the suppressed demand for air transport means we must operate on an extremely lean network,” said Kilavuka in the letters.
He said the staff rationalisation process was non-voluntary and will cut across the organisation, with the initial phase impacting 650 employees, adding that the move was within the limits of law and in compliance with orders issued by the Employment and Labour Relations Court earlier this month.
“A large part of our fleet will therefore remain grounded and difficult as it is, this will affect the number of staff we require for our operations.
We have and continue to to explore all available options to preserve as many jobs as possible,” said Kilavuka.
While the Covid-19 shocks are being blamed for challenges currently facing most troubled firms including KQ, as Kenya Airways is known by its international code, the airline was already facing headwinds before the virus landed in Kenya.
The airline reported a gross loss of 12.98 billion, a 71 per cent further drop compared to Sh7.55 billion loss the previous year, attributing it to an increase in operating costs that grew by 12.4 per cent to Sh129.1 billion compared to Sh114.8 billion in 2018. This was despite income growing to 128.3 billion from Sh114.1 billion in 2018.
It is estimating to lose between Sh42.4 billion and Sh53 billion by the end of the year if the coronavirus pandemic persists which slowed tourism and travel industry.
Speaking during KQ’s virtual Annual General Meeting, Kilavuka said the national carrier was taking measures to mitigate the losses.
“In the circumstances, I regret to advise you of management’s decision to terminate your appointments by giving you one month notice with effect from July 31, 2020,” Chief Human Resource Officer Evelyne Munyoki wrote in a letter in the possession of Business Hub.
Munyoki said the airline will give the laid off staff priority should an opportunity for employment arise, as it recognised “the the intensity of the assessment” they went through but subject to all role requirements being met and previous assessment reports.
Those affected together with their eligible dependants in the company’s records as at July 31, will continue receiving their medical cover until December.
They will also be paid their salary and all applicable allowances up to July 31, a one month’s salary in lieu of notice, any amounts including salaries owed by the company, and accrued leave days as at the time of being declared redundant.
“Upon returning the company properties that are in your possession, undergoing an exit medical check-up with KQ clinic and signing the necessary discharges, you will be paid your final dues less any amount that you may be owing the company,” said Munyoki.
Early July, KQ announced its intention to lay off 182 pilots in an exercise that would cost the airline Sh30 million, and 400 cabin crew.
Last week, the airline sacked 22 pilots having faced headwinds since March, when it grounded its fleet of 37, repurposing a few wide-bodied Boeings for cargo to keep the organisation running.