Loss making Kenya Airways(KQ) employees are subjected to a fresh round of pay cuts of up to 30 percent.
According to a memo by KQ CEO Allan Kilavuka, the move to slash salaries is to preserve cash amid unrelenting financial challenges due to the Covid-19 pandemic.
On Thursday, the airline’s chief executive said in a memo addressed to staff the new cost-cutting measure, aimed at keeping the company afloat. The cut, he said, will target workers earning Sh45,000 and above.
The payroll cuts of between five percent and 30 percent take effect this month and will remain for a period of between six to 12 months, with a quarterly review of the proposed pay variation.
“The proposed pay cuts range from a maximum of 30 percent and a minimum of 5 percent for earnings above 45, 000. We have also proposed that any staff across the network who earns the equivalent of less than 44,999 will have no pay variation for now. The salary used to determine the pay ranges is your basic pay and al fixed allowance,” the memo obtained by the Business Daily said.
Kilavuka further indicated that the airline will not pay deferred salaries that have been accrued since last April.
“I must stress that we cannot pay these amounts, and further, we do not have a timeline when payment will be possible. Should our financial and ability to pay improve significantly, we will redeem the differed amounts. Our proposal, however, is that, as soon as we get a sustainable cash injection that can cover our overdues, we will, at that time, commence discussions on the payment of the deferred salaries. Similarly, should our financial situation and ability to pay improve significantly, we will redeem the deferred amounts,” Kilavuka said
Analysts say that KQ could be setting the stage for deeper wage bill cuts in an environment where airlines are calling for State aid to avoid ruin.
KQ’s net loss for the six months ended June 2020 widened by 67.3 percent to Sh14.33 billion on account of Covid-19 disruptions that led to grounding of flights.
During the period under review, passenger numbers dropped by 55.5 percent to 1.1 million in contrast with 2.4 million over the same period last year, hurting revenues.
The half-year loss was more than the annual losses that KQ has been posting for the last three years.