Kenya Airways Will Have Cleared Their Backlog by the Fall of 2019, Which Ends the Labor StrikeNovember 16th, 2022
Kenya Airways Will Have Cleared Their Backlog by the Fall of 2019, Which Ends the Labor Strike
The Kenyan government’s Ministry of Transport, Aviation, and Civil Aviation have promised to clear a KES6.5 billion shilling backlog in deferred salaries by June 2023 – an effort they’ll do with the help of Kenya Airways’s Chief People Officer Tom Shivo.
Air Kenya is losing an estimated KES300 million (USD2.4 million) a day, or KES1.2 billion (USD9.8 million).
Kenya’s airlines have been affected by industrial action due to the Kenyan Airline Pilots Association (KALPA) strike that ended on November 8. After two days of no attacks, KALPA called off the strike on November 8 and pilots went back to work.
The strike by Kenya Airtrikes’s workers diverted attention from the airline’s efforts to recover since the 2017 Covid pandemic and continued to cost it money. CEO Kilavuka stated that “at the least, the unlawful industrial action will cost Kenya Airways approximately $17M in one week,” which translates to KES2.1 billion ($93.6 million) in one week.
The airline has been under pressure with their outstanding salaries. Employees are waiting for their payments since April 2020, when the carrier encountered travel restrictions during the pandemic. “There is a backlog of KES6 billion in deferred wages and this will most likely be cleared by June 2023,” Shivo told Business Daily Africa. “It’s important to note that of this amount, we have already paid up to 40%.”
Starting in June, the airline hopes to settle 100% of its workers’ monthly salary by offsetting it with cash delivered right when they start that month. For pilots, this means up to 95% of their accumulated payout per month. In January, the airline announced an agreement which does not cover pilots or any other employees.
The Nation newspaper reports that Kenya Airways expects to save a total of KES2.5 billion in annual savings starting 2023 thanks to negotiating 21% lower aircraft leases as it continues its restructuring programme to bring down the high-cost base, which primarily consists of high fleet ownership expenses. The national carrier has set a target of saving KES8 billion or 10% of its total operating expense budget in 2020.
Garuda Indonesia is renegotiating the return of some of their leased aircraft, as well as terminating some pricey leases to help with their financial obligations.
With the new leases, the carrier will break even by 2024. “This will help them grow,” he said.