Kenya Airways has announced the completion of its staff rationalization programme which it says has been a success. The rationalization program has since seen 126 employees representing 21 % of the estimated 600 members of staff that will leave the airline, volunteering to take up the company’s layoff package. The airline says the program will see Kenya Airways save close to KES 1.2 billion annually in labour costs as it embarks on its ambitious expansion programme.

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“We followed the labour laws to the letter, and looked around at what is happening in the marketplace in Kenya and Africa and packaged the best and most fair deal for our employees.” Said KQ Chief Executive Officer and Group Managing Director Dr. Titus Naikuni. “Our programme is generous to those affected from both a severance and provident perspective. Those leaving the business will have an estimated average pay-out of up to KES 2 million.”

Aftermath
Kenya Airways is also offering job and business training services to all those affected at company cost to ease their transition into new jobs or self-employment.

The airline, which is one of the most successful carriers in Africa, plans to more than triple the number of its aircraft from the current 35 in the next 10 years. The company said it will also take bank loans to finance the 10- year expansion plan that will cost KES 302.4 billion in the first five years. Naikuni said that having considered the business environment, the Board approved a Voluntary Early Retirement Programme, and a staff rationalization exercise to address internal inefficiencies, and reduce the employee cost base of KES13.4 billion by 10-15 %.

“Over the last few months the company has revisited cost structures, reviewed processes, increasing efficiencies in order to mitigate decline in profitability, whilst maintaining and growing customer satisfaction,” he said. Naikuni added that Kenya Airways’ cost base has grown disproportionately to its revenue generation with employee cost/person doubling in five years due to salary increases linked to union awards and job evaluation.

The Airline's employment costs doubled over the last 5 years, having risen from KES 6 billion in the year 2007 to KES 13.4 billion in 2012 with Kenyan employees growing to 4,170 from 3,729 while the number of overseas employees, mainly nationals of their respective countries, rising to 664 from 425, bringing the total number of employees at the airline at 4,834 at the end of the last financial year. Currently, the airline operates 36 aircraft in its fleet