What you need to know:
- Airline cites huge head count, high salary increments, and costly decisions driven by CBAs
Kenya Airways has completed its Sh800 million retrenchment in which 453 employees were sacked.
Releasing the official numbers on Thursday morning, the airline said a total of 578 left the company, with 125 opting for early retirement.
This means that 453 employees were declared redundant. The airline said one foreign employee was found redundant while six took an early retirement package.
Kenya Airways chief executive Titus Naikuni said the retrenchment will see it save about Sh1 billion per year.
“We had told the union that the pay increase we gave the employees during the strike was unsustainable in the long run. I guess the chicken have now come home to roost,” Dr Naikuni said but declined to comment on why he ignored a directive by Prime Minister Raila Odinga to suspend the exercise.
The workers body, Aviation and Allied Workers Union (AAWU), has been opposed to the exercise, saying the airline was targeting staff who took part in a 2009 strike.
“Our staff costs per year are about Sh13.2 billion while fuel accounts for Sh40 billion. It is critical that we deal with these costs,” Dr Naikuni.
He defended the 24 per cent increase in pay for executives, saying it was effected in 2011 when the airline recorded a strong performance.
“When the executive pay rose 24 per cent, that of other staff rose by 33 per cent. This was largely due to a one-off bonus package we gave our staff in 2011,” he said.
According to the retrenchment letters seen by the Nation, the sacked employees were paid severance pay of 20 days for every completed year of service.
The sacked employees were, however, paid three months’ pay. The letters were signed by Mr Tom Shivo, the head of human resources.
The airline maintained that it had explored all available options for reducing its wage bill, including introducing pay cuts.
“We did a test in the company and realised that pay cuts were not going to work. In any case, it is employees themselves who must agree to such a deal,” KQ’s human resource director Albert Mwendar said.
The airline also dismissed claims by the union that only employees of Kenyan origin were facing retrenchment while foreign nationals performing similar duties were protected.
The retrenchment started on August 1, 2012, owing to what the airline said was a large increase in headcount in 2011/12, significant annual staff salary increments, and costly decisions driven by Collective Bargaining Agreements (CBA) with the staff unions.
The number of Kenyan employees grew from 3,729 to 4,170 during the same period, while that of overseas employees rose from 425 to 664.
This comes just weeks after the airline outsourced a section of its staff, most of whom will be expected to run the yet-to-be launched low cost subsidiary — Jambo Jet —to a third party in a strategy to keep the wage bill low.
Labour consists of one of the biggest costs of the airline after fuel and the airline has been grappling with rising costs amidst rising competition.