Nairobi,Kenya
National carrier Kenya Airways (KQ) has revealed that it will give each of their staff affected by the rationalization exercise and voluntary early retirement a layoff package of up to Kshs 2 million.
The staff rationalization which has caused upheaval among the workers is the company’s venture as it plans to save Kshs 1.2 billion annually on labour costs and channel the funds to its expansion plans.
For the next seven months, the airline company is importing new small aircrafts with the large ones expected latest by 2014.
The Group CEO Titus Naikuini said on Thursday that 126 workers of the estimated 600 members of KQ staff that will leave the airline voluntarily were willing to take up the 2M payout.
“126 workers have agreed to go for early retirement and those leaving the company will have an estimated average pay-out of up to Ksh. 2 million,” said Naikuni at Serene Hotel.
Kenya Airways plans to triple the number of aircraft from the current 35 in the next 10 years. The company is planning to take bank loans to finance the 10-year expansion plan that will cost $ 3.6 billion US dollars in the first five years.
“To achieve this growth, the company has looked for ways to cut down costs and it has planned to outsource some of the activities which the board thinks can be done better by individuals outside the company. The laying off of workers is part of the strategy,” said Naukuni.
“The voluntary early retirement programme as well as staff rationalization exercise will arrest internal inefficiencies and reduce employee cost base of Kshs 13.4 billion by 10-15 per cent.”
Global financial crises in 2008 and 2009 besides the Eurozone debt crisis have adversely reduced travel demand globally. This, according to KQ boss, have affected the company’s revenue, coupled with the the doubling figure of its employees in the last five years.
“Compared to 2009, our employment costs have doubled and we are paying Kshs 13.2 billion as salaries to workers this year. Our revenues have been stagnant and we have even been forced to renegotiate contracts with the people we are outsourcing services from,” said Naikuni.
He added that the company was working with International Air Transport Association (IATA), an international trade group of airlines, to advice the company on matters like pricing, fuel usage as a tool of lowering costs.
The writer is a Communication and Journalism Student, Moi University
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