KQ sets aside Sh1.5b for staff rationalization program

National carrier Kenya Airways (KQ) is set to start repayment of the 80 laid off staff this week as part of the exit procedure in its first phase of the redundancy plan.

The airline, which announced a record loss of Sh26.2 billion on Thursday, has set aside Sh1.5 billion for the staff rationalization program.

Kenya Airways Chief Executive Mbuvi Ngunze said the airline would use internally generated funds to settle those leaving.

“If I look at the two phases were about Sh1 billion and Sh1.5 billion so it’s not the biggest part. So we are able to generate that from the internal cash flow, that’s the total pot when we are through with rationalization,” Mr Ngunze said.
The troubled airline is expected to see a total of 600 staff retrenched or redeployed to other departments, which is in line with its right-sizing estimates to secure the airline’s long-term operational efficiency.

By March 2015, the airline’s workforce stood at 3,973, with the rationalization program expected to significantly cut the wage bill. KQ has at the same time put a freeze on salary increments for unionized staff for two years as part of efforts to save costs.
Mr.Nguze last week stated that the management is in the process of finalizing the exit process in the first phase of staff rationalization.

“They are now in the process of finalizing their exit processes and also whatever comes and we were doing in that period, and we will start paying them next week which is part of the process of exit,” he said.

The ailing airline recently reduced its monthly fleet costs by over Sh711.2 million and got into sub-lease agreements to close gap in profitability and rapidly reduce cost and debt structure.

Reporting by Beatrice Eghwa