KENYA: Kenya Airways Staff To Undergo Pay Freeze

Kenya Airways’ employees will undergo a pay freeze in the next couple of years if their staff accepts the hard conditions that one of the major shareholders KLM wants met before it can inject fresh capital into Kenya A business.

The Dutch carrier has sought KQ’s commitment that it will keep employee costs in check as a condition for the release of Sh2.5 billion in capital contribution.

KLM has committed to inject a total of Sh7.9 billion into KQ as part of the ongoing restructuring, which will see its stake in the business drop to 13.7 per cent from current 26.7 per cent.

KLM’s demand is contained in a circular KQ has sent to its shareholders explaining the ongoing restructuring that will also see the Treasury and 11 local banks convert Sh50.2 billion of debt into equity.

The circular says KLM will either before completion of the restructuring or soon thereafter, but prior to the making of the open offer inject Sh2.5 billion less certain cash advances made under the joint venture agreement.

This is subject to certain conditions, including… agreeing to maintain staff costs at the current levels adjusted for inflation with any other increases subject to commensurate productivity improvements, says the circular.

KLM also says it will only wire the funds to KQ after interrogating the revised lease agreements for its Boeing 777-300 fleet to confirm if the new concessions are sustainable.

KQ’s wage bill stood at Sh15.7 billion as of March 2016, having dropped by eight per cent from the previous year’s Sh16.96 billion on cost-cutting measures, a trend KLM would like maintained in exchange for their monetary support.

The national carrier closed the year to March 2017 with lower staff expenses after exiting 288 of them through retrenchment and natural attrition, leaving the employee count at 3,582.

Two years ago, the airline entered into performance contracts with its cabin crew.

But pilots, who have been accused of not putting in the hours commensurate to their pay, have been hostile to a similar arrangement.

KLM simply wants the company to demonstrate efforts to ensure that staff costs keep pace with KQ’s performance. Their demand is not unreasonable, Mbuvi Ngunze, KQ’s restructuring adviser and former CEO, said in an interview.

Moss Ndiema, the secretary-general of a workers’ lobby which lists 2,500 KQ staff as members, says they will seeking reasonable increments this year to cater for inflation and performance.

The Kenya Aviation Workers Union (Kawu) expects to commence negotiations to amend their collective bargaining agreement (CBA) with the KQ management soon.

Late last year, KQ engaged Kawu seeking to freeze annual increments for a period of two years, a move they said would cut costs and increase revenue for the cash-strapped airline.

We are alive to the financial realities of the airline and we shall engage management from that point. However, our members still need to be cushioned from inflation and rewarded for performance, Mr Ndiema said in an interview.

Kenya Airways Ltd., more commonly known as Kenya Airways, is the flag carrier of Kenya.The company was founded in 1977, after the dissolution of East African Airways. The carrier's head office is located in Embakasi, Nairobi,with its hub at Jomo Kenyatta International Airport.

The airline was wholly owned by the Government of Kenya until April 1995, and it was privatised in 1996, becoming the first African flag carrier to successfully do so.Kenya Airways is currently a public-private partnership. The largest shareholder is the Government of Kenya (29.8.%), followed by KLM, which has a 26.73% stake in the company. The rest of the shares are held by private owners; shares are traded on the Nairobi Stock Exchange, the Dar es Salaam Stock Exchange, and the Uganda Securities Exchange.

At January 2013 Kenya Airways was considered one of the leading Sub-Saharan operators. It was ranked fourth among the top ten African airlines by seat capacity, behind South African Airways, Ethiopian Airlines and EgyptAir.The airline became a full member of SkyTeam in June 2010, and is also a member of the African Airlines Association since 1977.

In July 1980 the airline had 2,100 employees and a fleet of three Boeing 707-320Bs, one Boeing 720B, one DC-9-30 and three Fokker F-27-200s. At this time, Addis Ababa, Athens, Bombay, Cairo, Copenhagen, Frankfurt, Jeddah, Kampala, Karachi, Khartoum, London, Lusaka, Mauritius, Mogadishu, Rome, Salisbury, Seychelles and Zurich were among the airline's international destinations, whereas domestic routes radiated from Nairobi to Kisumu, Malindi, Mombasa and Mumias.

A Nairobi–Bombay nonstop route was launched in 1982 using Boeing 707-320Bs.A year later, the company commenced serving Tanzania. Flights to Burundi, Malawi and Rwanda were launched in 1984. Capacity on the European routes was boosted in November 1985 with the incorporation of an Airbus A310-200 leased from Condor. Kilimanjaro was first served in March 1986.That year, the airline ordered two Airbus A310-300s.

Kenya Airways was the first African carrier to acquire the type, and they were the first wide-bodies ordered by the company. Funded with a US$20,000,000,equivalent to $43,697,632 in 2016 loan, the delivery of these two aircraft took place in May and September 1986.They flew on the Kenya–Europe corridor, and permitted Kenya Airways to return the A310-200 to the lessor.In early 1988, the carrier ordered two Fokker 50s; for domestic routes, the airline received the first of these aircraft at the end of the year.

Also in 1988, the lease of a third A310-300 was arranged with the International Lease Finance for a ten-year period;the aircraft joined the fleet in November 1989.Leased from Ansett Worldwide, the first Boeing 757-200 was received in January 1990, whereas a third Fokker 50 was acquired in October the same year. By late 1991, two Boeing 737-200s had been leased from Guinness Peat Aviation.

In 1986, Sessional Paper Number 1 was published by the Government of Kenya, outlining the country's need for economic development and growth. The document stressed the government opinion that the airline would be better off privately owned, thus resulting in the first privatisation attempt. The government named Philip Ndegwa as Chairman of the Board in 1991, with specific orders to make the airline a privately owned company.

In 1992, the Public Enterprise Reform paper was published, giving Kenya Airways priority among national companies in Kenya to be privatised.Ndegwa was succeeded by Isaac Omolo Okero. In September 1992, Brian Davies, was appointed as the new managing director of the company.Davies had been previously hired to carry out a study of viability on privatisation,working for British Airways' Speedwing consulting arm.

Swissair was the first company to provide Kenya Airways with privatisation advice. In the fiscal year 1993 to 1994, the airline produced its first profit since the start of commercialisation.In 1994, the International Finance Corporation was appointed to provide assistance in the privatisation process, which effectively began in 1995.A large aviation industry partner was sought to acquire 40% of the shares, with another 40% reserved for private investors and the government keeping the remaining stake.

The government would absorb almost US$90 million in debts and would convert another US$31 million it provided in loans into equity; after reorganisation, the company would have a debt of approximate US$78 million.British Airways, KLM, Lufthansa and South African Airways were among the airlines expressing interest in taking a stake in Kenya Airways.

KLM was awarded the privatisation of the company, which restructured its debts and made a master corporation agreement with KLM, which bought 26% of the shares, becoming the largest single shareholder since then.Shares were floated to the public in March 1996, and the airline started trading on the Nairobi Stock Exchange.The Government of Kenya kept a 23% stake in the company, and offered the remaining 51% to the public; however, non-Kenyan shareholders could hold a maximum 49% share of the airline.

Despite 40% of the shares being kept by foreign investors following privatisation including KLM's 26% stake, top management positions were held by Kenyans.Following the takeover, the government of Kenya capitalised US$70 million, while the airline was awarded a US$15 million loan from the International Finance Corporation to modernise its fleet. In a deal worth US$82 million, two Boeing 737-300s were ordered in July 1996.

In January 2000, the airline experienced its first fatal accident when an Airbus A310 that had been bought new in 1986 crashed off Ivory Coast, shortly after taking off from Abidjan.By April the same year, the fleet consisted of four Airbus A310-300s, two Boeing 737-200 Advanced and four Boeing 737-300s. At this time the company had a staff of 2,780, including 400 engineers, 146 flight crew and 365 cabin crew.

From its main hub at Jomo Kenyatta International Airport, scheduled services were operated to Abidjan, Addis Ababa, Amsterdam, Bujumbura, Cairo, Copenhagen, Dar es Salaam, Douala, Dubai, Eldoret, Entebbe/Kampala, Harare, Johannesburg, Karachi, Khartoum, Kigali, Kinshasa, Lagos, Lilongwe, Lokichoggio, London, Lusaka, Mahe Island, Malindi, Mombasa, Mumbai, and Zanzibar.

In 2002, an order for three Boeing 777-200ERs was placed with Boeing; an additional aircraft of the type was acquired in November 2005.In March 2006, six Boeing 787-8s were ordered; the first two examples would be delivered in 2010 and the rest in 2011. The original Boeing 787 order was amended nine months later to include three more aircraft of the type.

In June 2012 the company announced the issuance of rights worth KSh20 billion, aimed at increasing capital to support expansion plans.Following the allocation of shares, KLM increased their stake in the company from 26% to 26.73%, while the Kenyan government boosted their participation into the company from 23% to 29.8%, becoming the largest shareholder.

Low-cost carrier Jambojet, created in 2013,and African Cargo Handling Limited are both wholly owned subsidiaries of Kenya Airways.

Partly owned companies include Kenya Airfreight Handling Limited, dedicated to the cargo handling of perishable goods 51%-owned,and Tanzanian carrier Precision Air 41.23%-owned.

As of July 2017, Sebastian Mikosz is Kenya Airways Group's managing director and chief executive officer (CEO). Mikosz was formerly CEO of LOT Polish Airlines, and took office on 1 June 2017.

KLM sponsored Kenya Airways' SkyTeam candidacy process in mid-2005. In September 2007, Kenya Airways became one of the first official SkyTeam Associate Airlines and achieved full membership in June 2010.The alliance provides Kenya Airways' passengers with access to the member airlines' worldwide network and passenger facilities.

Kenya Airways fleet:

- Boeing 737-700 4

- Boeing 737-800 8

- Boeing 787–8 8

- Embraer ERJ-190 15

- Boeing 737-300F 2

Kenya Airways codeshares with the following airlines:

- Aeroflot

- Air Burkina

- Air France

- Air Mauritius

- Air Namibia

- China Eastern Airlines

- China Southern Airlines

- Comair

- EgyptAir[73]

- Etihad Airways

- Garuda Indonesia

- Hong Kong Airlines

- Jet Airways

- KLM

- Korean Air

- LAM Mozambique Airlines

- Precision Air

- Royal Air Maroc

In April 2012, the airline launched a plan named Project Mawingu,the Swahili word meaning Clouds to add 24 destinations by 2021, including the start of services to Australia, and North and South America, and expanding its presence in Asia as well; this includes initiating routes to Chongqing, Hyderabad, and Washington, D.C. in Fiscal Year 2017-18 and to Ahmedabad, Moscow and Xiamen in Fiscal Year 2018-19.

In October 2013, the airline stated that it will add six new destinations every year, following the delivery of Boeing 777s and 787s the carrier has on order.

The first of five Embraer 190s ordered in 2010 was incorporated into the fleet in December that year. An additional order for ten aircraft of the same type was placed in August 2011;the carrier took delivery of the first and second of these fully owned aircraft thirteen months later.

The company announced in February 2011 its intention of acquiring a freighter aircraft to boost cargo capacity on African operations.Until February 2012, when a joint freighter service with KLM was launched, the carrier's cargo division had been using belly capacity on its operations; there are plans to buy and lease more freighter aircraft in order to boost capacity in the growing cargo market between Africa and Asia.

Furthermore, the airline announced in October 2012 the conversion of some Boeing 737-300s into freighter aircraft to complement the Boeing 747-400F service jointly operated with KLM and Martinair Cargo.The first of four converted Boeing 737-300s was delivered to the company in April 2013; Kenya Airways planned to fly this aircraft on African routes served by the Embraer 190s, in order to boost cargo capacity.The company took delivery of its first Boeing 777-300ER in October 2013.

Kenya Airways had nine Boeing 787 Dreamliners on order as of April 2011, although the company considered cancelling the order after systematic delays with the delivery dates.The handover of the first Boeing 787 took place on 4 April 2014.Two days later, Nairobi–Paris became the first route to be served by the Boeing 787.

n 2005, Kenya Airways changed its livery. The four stripes running all through the length of the fuselage were replaced by the company slogan Pride of Africa, whereas the KA tail logo was replaced by a styled K encircled with a Q to evoke the airline's IATA airline code.

Former Kenya Airways' frequent flyer programme Msafiri was merged with KLM's Flying Dutchman in 1997, which was in turn merged with that of Air France and rebranded as Flying Blue in 2005, following the fusion of both companies. Gold Elite and Platinum Elite members of the Flying Blue programme are offered the JV Lounge.This service is provided to Kenya Airways passengers, and to passengers flying with its partner airlines as well.Simba Lounge is a service provided to Kenya Airways Business passengers only.Both lounges are located at Jomo Kenyatta International Airport.

Different in-flight entertainment is available depending upon the aircraft and the class travelled. The airline's in-flight magazine is called Msafiri, and is distributed among the passengers in all aircraft, irrespective of the class.

Boeing 787-8

Premier World entertainment is AVOD; NVOD is offered in Economy class.

Boeing 737–700/800

Overhead screens in both classes, plus eight channels of audio offered.

Embraer 190

Individual in-seat touchscreens.

Kenya Airways has had two fatal accidents and two hull loss accidents.

10 July 1988: A Fokker F27-200, registration 5Y-BBS, approached the runway too fast and made a belly landing at Kisumu Airport inbound from Nairobi as Flight 650, skidding down the runway for some 600 m (2,000 ft).

11 July 1989: A Boeing 707-320B, registration 5Y-BBK, overran the runway at Bole International Airport following a brake failure. The aircraft had departed from the same airport, and the non-retraction of the landing gear prompted the crew to return.

30 January 2000: Flight 431 was a scheduled Abidjan–Lagos–Nairobi service, operated with an Airbus A310-304, registration 5Y-BEN, that plunged into the Atlantic Ocean and broke up, about a minute after it took off from Abidjan's Félix Houphouët-Boigny International Airport. There were 179 people aboard, of whom ten were crewmembers; most of the occupants were Nigerians.169 people perished in the accident. This was the carrier's first fatal accident.

5 May 2007: Flight 507, operated with a Boeing 737-800, tail number 5Y-KYA, crashed into a mangrove swamp immediately after takeoff for Nairobi, about 5.5 kilometres (3.42 mi) southeast of Douala International Airport.The flight originated in Abidjan, with a stopover in Douala to pick up passengers.All 114 people on board,105 passengers plus 9 crew members perished in the accident.

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