Kenya Airways stuff face a fresh round of pay cuts of up to 30 per cent to preserve cash amid unrelenting financial challenges due to Covid-19.
The airline’s chief executive, Allan Kilavuka said in a memo addressed to staff the new cost-cutting measure, aimed at keeping the company afloat during this difficult time, will target workers earning Shs1.5m and above.
The payroll cuts of between 5 per cent and 30 per cent 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 per cent and a minimum of 5 per cent for earnings above Shs1.5m. We have also proposed that any staff across the network who earns the equivalent of less than Shs1.5m will have no pay variation for now. The salary used to determine the pay ranges is your basic pay and all fixed allowance,” the memo said.
“The local currency amounts will be converted and fixed at the appropriate exchange rates for outstation staff.”
Mr Kiilavuka 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,” said Mr Kilavuka.
“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.”
The Business Daily did not immediately get a comment from KQ on its latest austerity measures and the total amount owed to workers so far.
The development comes at a time when the firm is yet to resume flights in some of its key routes. KQ effected pay cuts for its top managers, including Mr Kilavuka, 10 months ago to preserve cash and cut costs.
The airline’s senior managers took a 25 percent pay cut while directors were told to work for free. The airline’s top executives earn less than Sh200 million annually against a total wage bill of Sh16 billion.
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.