Kenya Airways to cut staff to protect profits

Last Updated 14 years ago by Kenya Engineer

Kenya Airways plans to lay off an unspecified number of employees in a restructuring process to cut costs in the face of declining profits. The company sent out a memo offering employees a voluntary early retirement option.

The process affects employees in its seven departments namely IT, commercial, finance, flight operations, ground operations, human resource and technical. According to its 2011 – 2012 financial statement, Kenya Airways has 4843 employees. One of the employees who did not want to be named said the memo gave them 10 days to take up the exit offer, while a full list of those retrenched will be released on by end of August.

The airline’s corporate communications manager, Chris Karanja, said it is an internal process declining to share the targeted number of employees of the estimated cost saving the company intends to make. “It is an issue of cost. We have seen declining revenues, based on that we are doing a restructuring exercise,” Karanja said on phone.

In the last financial year, KQ’s profit after tax dropped by 53 per cent from Shs. 3.5 billion in 2010/2011 to Shs. 1.7 billion. The carrier attributed the drop in earning to high operation costs especially fuel expenses and the negative impact of the Eurozone crisis, but no mention was given to the staff costs.

“This is voluntary retirement exercise, the communication has been sent out” said Mr. Karanja. The retrenchment is a further step for the listed company to reduce the number of employees, as it has also decided to outsource cabin crew employees for its upcoming low cost carrier, Jambo Jet, to a human resource firm.

The Aviation and Allied Workers Union which represents the airline’s workers said it had not been informed on this in advance which is likely to cause fresh conflict with the KQ management. By last evening, Nicholas Baraza, the AASU secretary general said he had not received any official communication on the matter.

Our source said the memo states that the exit terms will be as per the terms of individuals contracts or the Collective Bargaining Agreement for the union is able staff.