Dear KQ Family
It’s been a little while since I wrote to you all and I sincerely apologise for that. As you know, a lot has been going on in the organisation, and the leadership team and I have continued to take a hands-on approach to steer the business to better times. I plan to have a virtual town hall in the next two weeks so we can have more engagement.
Today I would like to share updates on our current performance, the status of people actions and predictability of salary payouts, and some exciting projects on Unmanned Aircraft Systems and the Fahari Hub set up.
1. PERFORMANCE:
While passenger numbers have improved slightly month on month for Kenya Airways, the business continues to trend behind forecast and last year’s results. Our Year to Date loss stands at US$160.2 million against US$ 79.9 million in 2019. Our revenues have also slumped by US$ 369 million compared to last year.
As I have committed to in the past, the leadership team and I continue to look for various ways to lessen the negative impact of this severe cash constraint on us all. However, the reality is that we must all continue to make sacrifices in the effort to reduce our costs.
2. PEOPLE ACTIONS AND PREDICTABILITY OF SALARY PAYOUTS
We have had to take a step back to build more consensus on the actions we are taking. There is a need to move with speed to reduce anxiety in the organisation, refocus everybody and continue building the future. We have, therefore, starting this past week, re-engaged the unions to try to agree on moving forward.
The leadership team and I are continuously reviewing strategies which we can deploy to stem the wage bill significantly while limiting the impact on our employees as far as possible. Ultimately, our goal is to:
Stop accruing more staff debt in the form of deferred salaries, even as we consider retaining almost all staff.
Seek ways to conserve cash by avoiding significant payouts.
Structure a fit-for-purpose organisation to reduce the overall wage bill by 40% (Ksh. 483 million per month).
Given the above, we are all faced with the following options:
2.1. Redundancy which will be considered after the other cost savings initiatives and subsequent to discussions with our social partners and employees.
2.2. Implementation of gross salary cuts for at least 2 years, depending on the number of people to retain. This option will also include a review of allowances through a consultative and consent-driven process.
2.3 Execution of a flexible rotation staff working program for at least 2 years where employees work for a defined number of months per year and take a break (not leave) for the rest. This, too, requires consultation and consent.
2.4 A request to social partners to reconsider their views on annual leave and unpaid leave. This will allow more of their members to take leave and account for this from May 2020. This option will also mean that the unions have to consider the withdrawal of the court cases on leave matters. Specifically, on this matter, we continue to encourage meaningful dialogue and engagement on alternatives that could reduce the impact of a potential redundancy exercise.
Salary Payouts:
Concerning salary payouts, it has been extremely challenging for us all. We have had no predictability of the Company’s finances over the last three months due to the ongoing pandemic and the resulting impact on our fiscal position.
We will make every reasonable effort to predict the salary payouts over a longer time (at least 3 months in advance), to enable staff to plan their finances and manage expectations during these uncertain times.
I desire to move towards higher rates of pay progressively and also to ensure that we don’t continue to accrue staff debt in the form of deferred salaries. As it stands right now, however, we do not have funds that can enable us to plan on how to pay the owed amounts. We will continue to monitor the situation and provide an update once there is an exact position on the way forward.
Honouring the 47 Retirees
I would like to honour the 47 colleagues who have volunteered to retire early. These colleagues have served with distinction for between 9 years and 41 years. Collectively they have been with the Company for 1,215 years. Those are many years of experience and skill. These colleagues have taken this action to help reduce the impact on the rest of the employees. I thank them for their service, and the HR department will be sharing their names in a separate communication.
3. PROJECT UPDATES
Amidst the challenges we are going through, we are also running numerous projects, including improving our customer focus, diversifying our business, entrenching the culture of innovation among many others. I will give you two exciting examples
3.1 Unmanned Aircraft Systems (UAS Technology)
I’m excited to share an update on the innovative Unmanned Aircraft Systems (UAS) project led by the able and talented Technical Department.
UAS is a disruptive technology providing various solutions to our country’s Big 4 Agenda and our mission to ensure the sustainable development of Africa. UAS technology supports surveillance and aerial mapping, emergency and rescue services, among others.
As the key player in Kenya’s aviation sector, we have a part to play in driving the advancement of UAS technology for the benefit of our country and Company.
I am pleased to report that the Company is seeking to establish mutually beneficial partnerships with various state corporations which have the potential to benefit from this technology. This will continue to put Kenya Airways at the heart of driving a robust socio-economic agenda for Kenya while overseeing the seamless adaptation of the UAS operations by Government entities.
We will continue to keep you posted on further developments in this area.
3.2 Fahari Hub
We are happy to announce the official launch of Fahari Hub. This is an innovation hub that will be initially run virtually (online) and whose objective is to encourage bottom-up ideation and cross-functional collaboration.
The Virtual Fahari Hub will create an opportunity for all staff to share and work on their creative ideas while still engaged in their daily tasks. I look forward to the next-level creativity arising from this project!
Finally:
“Even the darkest night will end, and the sun will rise.”
This quote by Victor Hugo sums up my message today.
I have been encouraged and uplifted by the tremendous resilience and admirable fortitude you have all displayed in the face of seemingly insurmountable challenges. I want you to know how much your commitment encourages the leadership team and I to focus all our energies on finding lasting solutions.
I am confident that if we don’t give up, we will find a way and emerge stronger! This, too, shall pass.
Allan Kilavuka
possunt quia posse videntur