By Fred Maingi in Nairobi
Kenya Airways has announced the
modalities of the
staff rationalisation programme which will start with a Voluntary
Early Retirement programme followed by a redundancy programme in a bid
to streamline cost management.
Kenya Airways Chief Executive Officer and Group Managing Director,
Dr. Titus Naikuni, said the decision by the airline’s Board of
Directors was informed by the long term sustainability needs of the
airline in a harsh operating environment that is currently
characterised by a downturn in passenger volumes, declining revenues,
unstable fuel prices and an increasingly competitive environment.
Naikuni said the exercise started on August 1, 2012 owing to the
large increase in headcount in 2011/12, significant annual staff
salary increments, and costly decisions driven by the Collective
Bargaining Agreements (CBA) negotiations with the staff unions driving
labour costs to unsustainable levels.
“Despite various initiatives that we have put in place, our cost base
continues to be extremely high. This coupled with other direct
operating costs, have put pressure on our contribution margin reducing
our overall ability to operate profitably,” he explained.
Kenya Airways employment costs have more than doubled over the last
six years, having risen from Ksh.6 billion in the year 2007 to
Ksh.13.4 billion in 2012. The number of Kenyan employees has grown
from 3,729 to 4,170 during the same period, while the number of
overseas employees rose from 425 to 664. The total number of employees
stands at 4,834 at the end of the last financial year.
As part of the restructuring exercise, Naikuni noted that some
positions will be declared redundant and in some cases the airline
will have to outsource labour and services in some of the non-core
functions of the airline due to the technical nature of the industry.
Naikuni also explained that Kenya Airways has adhered to the
provisions of the Employment Act of 2007 and has issued one month
notice to the respective unions, the Ministry of Labour and the
employees.
He assured all investors that the airline will forge ahead with its
10 year growth strategy despite the few adjustments that may be
occasion by the on-going restructuring programme.
An Employee Assistance Program has been in put in place to assist
employees who choose to take up the Voluntary Early Retirement option.
The program benefits include: access to professional counselling
services, and debrief sessions. A career planning and training
sessions will be organise for all employees leaving the company.
According to the International Air Transport Association, or IATA,
demand for global air travel continued to face uncertain outlook as
falling business confidence and the high possibilities of a global
recession continues to overhang the sector. Global air travel rose
6.2% on the year in June, up from 4.5% in May, said IATA. The aviation
industry is suffering amid global economic uncertainty--fuelled by
Europe's debt crisis--and high fuel prices.
However, adjusting data for seasonal factors, worldwide air traffic
volumes rose only 0.3% month-on-month between June and May, reflecting
the recent slowdown in demand for air transport as passenger load
factors fell 0.1% in the same period.
staff rationalisation programme which will start with a Voluntary
Early Retirement programme followed by a redundancy programme in a bid
to streamline cost management.
Kenya Airways Chief Executive Officer and Group Managing Director,
Dr. Titus Naikuni, said the decision by the airline’s Board of
Directors was informed by the long term sustainability needs of the
airline in a harsh operating environment that is currently
characterised by a downturn in passenger volumes, declining revenues,
unstable fuel prices and an increasingly competitive environment.
Naikuni said the exercise started on August 1, 2012 owing to the
large increase in headcount in 2011/12, significant annual staff
salary increments, and costly decisions driven by the Collective
Bargaining Agreements (CBA) negotiations with the staff unions driving
labour costs to unsustainable levels.
“Despite various initiatives that we have put in place, our cost base
continues to be extremely high. This coupled with other direct
operating costs, have put pressure on our contribution margin reducing
our overall ability to operate profitably,” he explained.
Kenya Airways employment costs have more than doubled over the last
six years, having risen from Ksh.6 billion in the year 2007 to
Ksh.13.4 billion in 2012. The number of Kenyan employees has grown
from 3,729 to 4,170 during the same period, while the number of
overseas employees rose from 425 to 664. The total number of employees
stands at 4,834 at the end of the last financial year.
As part of the restructuring exercise, Naikuni noted that some
positions will be declared redundant and in some cases the airline
will have to outsource labour and services in some of the non-core
functions of the airline due to the technical nature of the industry.
Naikuni also explained that Kenya Airways has adhered to the
provisions of the Employment Act of 2007 and has issued one month
notice to the respective unions, the Ministry of Labour and the
employees.
He assured all investors that the airline will forge ahead with its
10 year growth strategy despite the few adjustments that may be
occasion by the on-going restructuring programme.
An Employee Assistance Program has been in put in place to assist
employees who choose to take up the Voluntary Early Retirement option.
The program benefits include: access to professional counselling
services, and debrief sessions. A career planning and training
sessions will be organise for all employees leaving the company.
According to the International Air Transport Association, or IATA,
demand for global air travel continued to face uncertain outlook as
falling business confidence and the high possibilities of a global
recession continues to overhang the sector. Global air travel rose
6.2% on the year in June, up from 4.5% in May, said IATA. The aviation
industry is suffering amid global economic uncertainty--fuelled by
Europe's debt crisis--and high fuel prices.
However, adjusting data for seasonal factors, worldwide air traffic
volumes rose only 0.3% month-on-month between June and May, reflecting
the recent slowdown in demand for air transport as passenger load
factors fell 0.1% in the same period.
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