According to reports, the staff of Kenya’s national carrier; Kenya Airways also known as KQ, are experiencing a new round of pay cuts of as much as 30 percent in a bid to conserve financial resources to better combat the financial difficulties brought on by the ongoing Coronavirus pandemic.
The Chief Executive Officer (CEO) of Kenya Airways; Allan Kilavuka made it known in a memo addressed to the employees of the airline on Thursday the 14th of January 2021, that the pay cuts decision is in a bid to stop the airline from going bankrupt during the ongoing pandemic. Employees who earn 45,000 Kenyan Shillings and above, are the who will be affected by the fresh round of pay cuts.
The pay cuts of between 5 percent and 30 percent will be implemented this month (January 2021), and will be the born for anything from 6 months to 12 months, combined with a quarterly review of the implemented pay variation.
According to Business Daily Africa the memo read, “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.”
It added that, “The local currency amounts will be converted and fixed at the appropriate exchange rates for outstation staff.”
The Chief Executive Officer (CEO) of Kenya Airways; Allan Kilavuka revealed that the national carrier will not pay any of the deferred salaries which have been pending since April 2020.
In his words, “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.”
Image From The Ministry Of Tourism & Wildlife. www.tourism.go.ke
He added that, “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.”
Kenya Airways has not however revealed the total amount it owes its workers.
The pay cuts decision is coming at a time when the airline has still not resumed flights in a number of its key routes.
Exactly 10 months ago Kenya Airways had its top managers including its Chief Executive Officer; Allan Kilavuka go through pay cuts as well, in order to save costs and conserve cash.
Its senior managers underwent a 25 percent pay cut. Its directors were however instructed to work for free.
Against a total wage bill of 16 billion Kenyan Shillings, the top executives at Kenya Airways collective sum of less than 200 million Kenyan Shillings every year.
Analysts believe that Kenyan Airways might be preparing for even deeper wage bill cuts in an environment where airlines are calling for aid from the government in order to effectively fight falling finances.
In the 6 months that ended in June 2020 the airline’s net loss increased by 67.3 percent to arrive at 14.33 billion due to the disruptions brought on by the ongoing Coronavirus pandemic which in turn led to the halting of flights.
Kenya Airways’ passenger number also dropped by 55.5 percent to 1.1 million passenger in the same 6 month period. This is considerably lower than the 2.4 million passengers it achieved during the same period in 2019, and proof of its revenue dropping. The 6 month period loss is also much more than the yearly losses that the Airline posted in the 3 years prior.
It has a total cost of 150 billion Kenyan Shillings, leading to a belief that a reduction in staff will lead to lesser costs.
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