National carrier Kenya Airways (KQ) has announced plans to retrench some of its workers ahead of its nationalization that is set to commence soon.
In July 2019, the National Assembly, in an effort to turn around the performance of the struggling national carrier, approved the airline’s nationalization proposal put forth by Parliament’s Transport Committee. Parliament unanimously voted to pass the proposal which led to the establishment of an umbrella Aviation Holding Company to oversee operations at the airline.
According to the airline’s acting Chief Executive Allan Kilavuka, the layoffs are in line with the carrier’s restructuring program aimed at bringing KQ back to profitability.
“Roles will change; some maybe enriched while others are merged. I also want to be clear that as difficult as it is, some roles will disappear altogether, resulting in redundancies,” Mr. Kilavuka said in a memo addressed to the airline’s employees.
Mr Kilavuka has, however, pledged to make the planned redundancy humane “and will involve relevant stakeholders as required by the law.”
The move to retrench workers by KQ comes just one month after the carrier issued a profit warning for the year ending December 2019 in a move that hinted at the airline incurring more losses than the Ksh7.56 billion the national carrier posted in 2018. Given that its half year loss for the period ending June 2019 more than doubled to Ksh. 8.56 billion, it is estimated that its full year loss could exceed Ksh. 9.43 billion.
The airline’s Board of Directors made the announcement in a notice to the Capital Markets Authority which requires all NSE listed firms to do so whenever they expect earnings to drop by at least a quarter.
“Although Kenya Airways realised improved revenue growth in the year, profitability was constrained by the increased competition in the airline area of operations, which, in turn, has increased pressure on pricing in order to remain competitive,” Michael Joseph, KQ’s Chairman said in the notice then.