NAIROBI, Kenya, Sept 6 – Kenya Airways (KQ) on Thursday announced the completion of its staff rationalization programme that has seen 578 employees retrenched.
The layoffs which kicked off earlier this week will cost the airlines over Sh800 million in retirement packages.
The airline’s CEO Titus Naikuni said the layoffs will see the company save up to Sh1.2 billion every year which he said will be reflected in the first half of the next financial year.
“You may ask how we got into this. You know we had an issue with our unions a few years ago, and at that time we were forced to have major increases in salaries and allowances. And we warned that this would not be sustainable for long,” Naikuni said. “We believe after this exercise we should be able to deliver a sound business going forward.”
He added that out of the 578 employees, 126 volunteered, with everyone going home with not less than Sh1.4 million.
“We are offering training services to those that we have retrenched and some of them have to start their businesses. And my message is that if there are skills you got from KQ, don’t fear to go out and form your own company. Tomorrow you could be the outsourcing provider,” Naikuni said.
The CEO said the decision was made by the Board of Directors following a harsh operating environment that is currently characterized by a downturn in passenger volumes, declining revenues, unstable fuel prices and an increasingly competitive environment.
Human Resource Director Alban Mwendar denied allegations that the management ambushed the affected employees adding that the company had given a one month’s notice before the programme kicked off.
“We need to retain people who have the correct skills set. That is, productivity and performance on the job. Those are the things we looked into while we were making decisions of who were to go home,” Mwendar said.
In the last financial year, the number of the total employees stood at 4,834 that included 4,170 Kenyans and 664 foreigners.
KQ has however assured that there will be no further layoffs any time soon, adding that the programme was not being carried out in phases as was reported in the media.
However the management gave no comment as to why it ignored the Prime Minister’s directive to suspend the exercise.
The PM had ordered for proper consultation between the government, the KQ management and the workers.
“We had to do this. On the issue of the Prime Minister, let us leave it that way, I would not want to go into that direction,” Naikuni said.
The airline said its labour costs have more than doubled in the last six years to stand at Sh13.4 billions, hence the need to streamline its cost structure.
Earlier the Aviation and Allied Workers Union (AAWU) said the move was against the laid down regulations adding that there were no negotiations especially on benefits.
“We have talked to everyone. We just didn’t give them letters and told them to go. But if there are still those whom we have not met, they are free to come to the human resource department,” Naikuni said.
He also defended the 24 percent increase in pay for executives saying it was effected in 2011 and across the board not just the top management.
“In 2011 when the airline recorded a very strong performance… and in fact when the executive pay rose 24 percent, the other staff got a raise of 33 percent,” he said.
Other management costs that the airline plans to take includes cutting out the non-profitable destinations, reducing flight frequencies and reviewing downwards some of the procurement costs.
The airline plans to triple the number of its aircraft from the current 35 in the next 10 years.
The company said it will also take banks loans to finance the 10 year expansion plan that will cost $ 3.6 billion (Sh302 billion) in the first five years.