Saturday, 18 August 2012

Kenya Airways from retrenching its employees until a suit brought by the workers union challenging the layoffs is heard and determined.


The High Court has temporarily stopped national carrier Kenya Airways from retrenching its employees until a suit brought by the workers union challenging the layoffs is heard and determined.

The airline, which is 26.73-per cent-owned by Air France KLM, said this month it would shed off staff through voluntary retirement, redundancies, and outsourcing of non-core roles to contain soaring operation costs.

“The respondent (Kenya Airways) is hereby restrained by way of temporary injunction from proceeding with any negotiations or any staff rationalisation that may render members redundant pending the hearing,” Judge Onesmus Makau said in court orders seen by Reuters yesterday.

The Aviation and Allied Workers Union filed a lawsuit in the industrial court seeking to stop the airline’s action on the grounds the management had breached the labour relations act that requires a firm to engage workers through their union before laying them off.

The parties will return to the court on September 21 for direction on the case, said Leonard Ochieng’, the lawyer for the workers.
Kenya Airways was forced to raise workers’ pay in 2010 after a strike that nearly paralysed its operations.

Pre-tax profit
High costs caused the carrier’s pretax profit to plunge 57 per cent in the full year that ended last March.

The carrier, one of the largest in sub-Saharan Africa alongside Ethiopian Airlines and South African Airways, did not indicate the level of savings it was targeting or how many jobs would be lost in the exercise. The airline plans to shed staff through voluntary retirement, redundancies and outsourcing of non-core roles to contain soaring costs and protect its bottom line but unions said they would fight the job cuts.

The airline, now owned 26.73-per cent by Air France KLM and 29.80 per cent by Government after the recent Rights Issue, which attracted increased interest from foreign investors said the programme will first offer a Voluntary Early Retirement Package to staff followed by a redundancy programme.

According to Kenya Airways Chief Executive, Titus Naikuni, the decision was informed by long term sustainability of the airline in an environment marked by low passenger volumes, unstable fuel prices and increasing competition.

“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 said in a statement explaining the move by the carrier.

Naikuni said employment costs have more than doubled over the last six years, having risen from Sh6 billion in the year 2007 to Sh13.4 billion this year.

Employment act
Kenyan employees have grown from 3,729 to 4,170 during the period, while overseas employees rose from 425 to 664. The total number of employees stood at 4,834 at the end of the last financial year.

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