Kenya Airways cuts executive pay as losses mount

The pay for top Kenya Airways executives dropped by 8.4% in the financial year ended March 2015, breaking a trend where their salaries and allowances have been on the rise even as the carrier sank into losses.

KQ’s latest annual report shows that the annual take-home for executive directors declined from Ksh105 million to Ksh95 million, in a year when the national carrier posted a Ksh29.5 billion pre-tax loss.

The airline’s chief executive Mbuvi Ngunze (who took over the position in November 2014) and group finance director Alex Mbugua are listed in the report as KQ’s only executive directors. “Nine out of the 11 members of the board are non-executive including the chairman of the board,” KQ states in its newly released 2014/2015 annual report.

The year to March 2015 pay package includes Titus Naikuni’s salary for seven months from April 1 to October 31 and Mr Ngunze’s pay for the five months that followed until the end of the financial year this March.

The annual report does not reveal how the money is shared between the two current executives, but Mr Ngunze is expected to be taking a larger portion than Mr Mbugua.
However, given the Ksh8 million drop in pay this year, it can be deduced that that the new CEO was hired at a lower salary than his predecessor.

KQ’s substantial payments to its two executives is in sharp contrast to the carrier’s poor performance. For instance, in the 2013/2014 financial year, the airline’s executive pay rose by one third, against the Ksh3.4 billion loss it reported in the same period.

Two years earlier, the airline had seen its profits decline from Ksh3.53 billion to Ksh1.66 billion, but executive pay that year went up by nearly a quarter to Ksh82 million. Last year’s executive pay cut is just the fourth in the past nine years. KQ’s management cited a tourism slump, the Ebola epidemic in West Africa and high operating costs as some of the causes of the record-setting slump in profitability.

Its debt-fuelled aircraft acquisition spree more than doubled its fleet ownership costs to Ksh25.9 billion, dragging the airline further down to its record-breaking loss.
The airline’s 4,002 employees — representing a slight increase in the staff count from the previous year’s 3,989 — earned a total of Ksh16.9 billion in the 12 months ended in March compared to the previous year’s Ksh15.3 billion.