Struggling national carrier Kenya Airways (KQ) has plans to lay off a significant number of employees in yet another attempt to prevent collapse. The airline is allegedly sending home 182 pilots with more than 400 cabin crew also facing job losses
The airline which has been heavily battered by the pandemic has said it is unable to fulfill its obligations and maintain operations in the current environment. 22 pilots have already been served with redundancy letters.
“The effects of Covid-19 have adversely affected our operations as an airline which has seen us significantly suspend and reduce our operations,” KQ says in the letters to pilots dated June 24 and served on June 29.
The company which is currently set for state takeover has seen planes grounded since March and the airline’s only hope for survival lies ultimately only on the reduction of operations before resuming flights again.
“A decision has been reached to carry out an organization-wide rightsizing exercise which will result in a reduction of our network, our assets, and our staff. Effectively, we have commenced a phased staff rationalization process, which we expect to conclude by September 30, 2020,” said KQ chief executive Allan Kilavuka in a memo to staff.
The boss added that with the suppressed demand for air transport due to the virus that has claimed thousands of lives globally, a large part of the airline’s fleet will remain grounded even after it resumes gradual flights in August. “As we prepare for the anticipated resumption of domestic flight operations in Kenya, the projected depressed demand will require that we only keep the resources we will need for these operations,” Kilavuka said
“We will also operate a reduced network when we resume our services as we anticipate that it will take some time before the industry starts to rebound,” added Mr Kilavuka.
However, even prior to the killer disease, the national carrier had been struggling with losses and had only a workforce estimated at 4,000 and operated a fleet of 36 to 54 global destinations.
KQ’s stock has been suspended from trading on the Nairobi Securities Exchange (NSE) for three months effective due to the plans of the approved nationalization as a way of saving the national carrier from the noose of bankruptcy by exempting it from tax.
KQ is facing a financial crisis and is grappling with negative working capital of $391.5 million, the airline saw its net losses for the year 2019 widen to $129.7 million from $75.8 million in 2018.
Staff costs in 2019 rose by $9.1 million to $158 million as the carriers total operating costs surged to $1.3 billion on the back of increased operations and changes in accounting estimates.
