Kenya Airways to lay off 600 workers in restructuring process

By Soko Directory Team / Published April 1, 2016 | 7:21 am



kenya-airways sky-team

Kenya Airways is set to lay off 600 employees a representation of 15 per cent of its work force deemed redundant or redeployed elsewhere.

“We will embark on a restructuring process that will result in approximately 600 members of staff being declared redundant or redeployed elsewhere,” read a statement on Thursday from the airline’s Chief Executive Mbuvi Ngunze.

The measures are part of a reorganization plan developed by McKinsey & Co. Last month, the airline appointed PJT Partners Inc. to advice on how to restructure the company’s balance sheet and raise long-term financing.

According to Ngunze, “We are at a stage where our Turnaround Strategy is beginning to gain traction. Over the next six to nine months, we will work with PJT Partners and they will be instrumental in assisting the airline secure its future beyond the turnaround. The Board is confident that they are the right choice.”

This move was reached upon as a way of cutting the huge costs in terms of payroll, which have been estimated that they will reduce by about KSh.2 billion annually. This amount is expected to be saved which will in turn account for 10 per cent of the KSh.20 billion that is to be saved in the carriers’ turnaround plan named Operation Pride.

The statement indicates that in the past five years, the staff cost grew by 51 per cent to Sh.16.96 billion, from Sh.11.2 billion in 2011 thus the need for cutting of the largest number of employees.

This is not the first time that the airline will be laying off its staff as it also did the same in 2012, where it laid off 599 employees.

Kenya Airways has been unprofitable since 2012 as the carrier struggles with a decline in tourism traffic following a number of attacks by Alshabaab terrorist.

Among other changes in the restructuring process include prices review, sales, reducing costs, cash and financial optimization and revenue management.


Article by Vera Shawiza.

 




About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

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