SLASH

KQ goes for employees salaries in fresh 30% cut

Management has pegged the move on the continued financial difficulties.

In Summary

•Management has proposed pay cuts range from a maximum of 30 per cent and a minimum of five per cent (5%) for those earning above Sh45,000.

•It has also proposed that any staff across the network who earn the equivalent of less than Sh44,999 will have no pay variation for now.

Kenya Airways hostesses at the Jomo Kenyatta International Airport/
Kenya Airways hostesses at the Jomo Kenyatta International Airport/
Image: FILE

National carrier–Kenya Airways is going for employees salaries in a second wave of a pay cut proposed at a maximum 30 per cent.

Management has proposed pay cuts range from a maximum of 30 per cent and a minimum of five per cent (5%) for those earning above Sh45,000.

It has also proposed that any staff across the network who earn the equivalent of less than Sh44,999 will have no pay variation for now.

The local currency amounts will be converted and fixed at the appropriate exchange rates for outstation staff. We will seek consent appropriately for the variation of pay,” Group managing director and CEO Allan Kilavuka says in communique' seen by the Star.

HR will provide more information on the proposed pay variation and pay ranges during the planned staff and social partner/union engagements in the coming few days,” he adds.

Kilavuka has pegged the move on the continued financial difficulties at the airline in the wake of Covid-19 which has worsened its financial status.

Last year, KQ, as it is known by its international code, effected pay cuts for senior managers and top earners, who took a 25 per cent pay cut.

Its pilots and key staff salaries were also affected in the move which saw them fly on rotation, with some taking home a paltry 25 per cent pay, leaving the airline with salary arrears amounting to millions.

“I have previously communicated that the company has been struggling to meet its financial obligations. We owe our service providers and you, our employees, significant amounts. Our financiers and the government of Kenya are also challenging the deferred pay arrangement as it is unsustainable,” Kilavuka notes.

The airline has received a Sh2 billion funding from the national government to help sustain its operations.

According to Kilavuka, the carrier is on a “cautiously optimistic recovery and rebounding journey.”

“We will forge ahead with our plans for 2021 with determination. However, we are mindful that the new Covid variant will result in new travel restrictions, significantly affecting passenger numbers in our key destinations,” he notes.

In December 2020, management had requested to pay higher payout rates and not owe any salary amounts for that month.

“We now also have to consider the option of temporary pay variations, that is reducing pay across the company starting January 2021 and for at least 6-12 months, with a quarterly review of the proposed pay variation,” says Kilavuka in the internal communication.

The salary used to determine the pay ranges is the staff's basic pay and all fixed allowances.

Meanwhile, staff owed in deferred pay that has been accrued since April 2020 have to wait longer to get their monies according to management, which says the company does not have the financial ability to pay the owed deferred salaries at this time.

“I know that this is not the response that many of us may want to hear; however, I must stress that we cannot pay these amounts, and further, we do not have a timeline when payment will be possible,” Kilavuka notes.

He said the airline will commence discussions on the payment of the deferred salaries once its gets a sustainable cash injection that can cover its overdues.

KQ financial troubles however date back pre-Covid as it posted year-on-year losses, for the past six years, blamed on poor management and ambitious expansion plans that failed to materialise.

It's net loss for the six months ended June 2020 widened by 67.3 per cent to Sh14.33 billion, blamed on Covid-19 disruptions on global travel.

The carrier grounded its passenger flights last year when the government temporarily stopped international travel to contain the spread of coronavirus.

This was between March and August for international flights. Domestic flights resumed in July.

During the period, focus shifted to cargo where some passenger aircraft were converted into freighters.   

KQ reported a gross  'oss of 12.98 billion for the financial year ended December 31, 2019, which was a 71 per cent dip from Sh7. 55 billion loss the previous year.

Its worse loss was however in 2016 when it reported a Sh26.2 billion loss after falling deeper from the Sh25.7 billion loss reported in 2015.