The pilots of troubled Kenya Airways (KQ) on Monday canceled the indefinite strike they called last week to begin October 18 with the intervention of high-ranking government officials, including the country’s president, Uhuru Kenyatta. The Kenya Airlines Pilots Association (KALPA) on Monday evening announced that their day-long negotiations with various government ministries and the State House had yielded a tentative resolution of grievances. Secretary general of KALPA, Paul Gichinga, told a press conference in Nairobi that the pilots agreed to call off the strike after assurances from the state that it would meet their demands. Gichinga said they returned to work to allow more time to resolve the dispute.
The association had demanded a change of management at KQ, asserting that mismanagement by all the current top executives had led to the airline’s decline.
The pilots requested the government to remove KQ board chairman Dennis Awori and group managing director and CEO Mbuvi Ngunze, who assumed that post in November 2014. Kenyatta assigned solicitor-general Njee Muturi to help reach a deal that would see both leave the airline.
“We have been meeting throughout the week and there has been goodwill on both sides and we are giving it more time to have the issues resolved,” Gichinga said.
The embattled Ngunze and Awori did not come to the press conference. Former Safaricom chief executive Michael Joseph—who became a director of the loss making KQ—spoke on behalf of the board. “Whatever change that we are going to make, whatever change that we have agreed on is confidential until the board makes those announcements,” Joseph told journalists when asked the details of KQ deal with the pilots. He said the board would discuss the pilots' demands at a meeting scheduled for October 26.
KQ sources told AIN that Joseph has already replaced Awori as board chairman of the troubled airline and that his appointment would be ratified and announced during the October 26 meeting.
KQ, which calls itself “The Pride of Africa,” ranks as the fourth largest airline on the continent, behind Ethiopian Airlines, South African Airways and Egypt Air. It has suffered through spiraling losses since 2012. KALPA has been at loggerheads with the management of the airline after the latter announced the worst financial results last year, reporting a net loss of 25.7 billion Kenyan shillings ($256 million). KALPA had called for a strike in April, when management announced a staff retrenchment plan affecting 600 employees, 36 of them cockpit crew. The association suspended the strike until June, after the management brokered a deal to discuss demands.
However, the airline plunged deeper into the red after recording a net loss of 26.2 billion Kenyan shillings ($258.3 million) for the fiscal year ending March 2016. Ngunze attributed the massive loss to stiff competition from Middle Eastern carriers, volatility of exchange rates, terrorism and travel advisories as well as fluctuations in fuel prices.
To revive the ailing airline Ngunze’s administration announced a turnaround strategy dubbed “Operation Pride” through which the airline expects to get at least $200 million in value from increasing revenue and cost cutting. Management has hired international consulting firms McKinsey and Seabury to spearhead a revival strategy.
The strategy involves reorganization of routes, downsizing fleet and retrenchment of staff. The national airline cancelled long haul-flights to China and India and leased out or sold Boeing 777 and 787 jetliners. Ngunze insists that the turnaround strategy was working, a claim KALPA rejects.
KQ’s management found itself in the midst of another crisis last week, when the association called for a strike. The simmering crisis reached a boil on October 14, when cabin crew, outsourced from a firm called Career Directions Ltd, engaged in a work slowdown to protest low pay. The national airline had to cancel and delay flights after 105 cabin crewmembers called in sick over the weekend of October 15 and 16. On October 17, KQ announced that normal operations had resumed and that it expected no further interruptions.
Analysts say the cash-strapped KQ needs a cash injection of $1 billion. Management is searching for strategic investors and hopes to secure funding with the help of U.S. investment bank PJT Partners.
Air France-KLM owns 27 percent of the airline, while the Kenyan government controls another 29.8 percent stake.
