Kenya Airways Chairman Prepares Exit Ahead of Pilot Walkoutby
Unprofitable carrier will stop ticket sales if strike happens
Pilots demand that CEO, chairman resign; plan Oct. 18 stoppage
Kenya Airways Chairman Dennis Awori said he plans to leave Africa’s third-largest airline after a pilots union called for a seven-day strike to protest against his employment and the position of Chief Executive Officer Mbuvi Ngunze.
“‘I see myself leaving, yes,” Awori said by phone on Thursday. “I have begun the turnaround and honestly Kenya Airways needs somebody who has much more time than I have.”
The Kenya Airline Pilots Association is demanding the resignation of the two executives, saying they aren’t capable of executing a financial recovery of the unprofitable carrier, which is part-owned by Air France-KLM. Similar industrial action by KALPA in April cost Kenya Airlines $2 million in a day, the airline said. The strike is due to start Oct. 18.
“The threatened action is already costing Kenya Airways significant losses as passengers have begun to make cancellations,” the airline said in an e-mailed statement. The costs associated with selling flights and then not carrying passengers will be too great a financial burden, the carrier said, meaning it will have to halt ticket sales unless the strike is called off.
The timing of Awori’s planned departure hasn’t been decided, the chairman said. He didn’t comment on Ngunze’s future.
Halting ticket sales “means management would be preparing for an extended strike period,” Eric Musau, an analyst at Standard Investment Bank, said by phone from the capital, Nairobi. “The best case is for them to agree on some sort of settlement. I’m not really sure it is for the pilots union to say whether management should go or not.”
Kenya Airways first-half earnings to be released at the end of this month will show a reduction in net loss to 5 billion shillings ($49.3 million) from 12 billion shillings, the airline said, without referring directly to the CEO. In that context, the strike is “unjustified and uncalled for,” it said. The company, which reported a wider full-year loss of 26.2 billion shillings on soaring finance costs, plans to cut 600 jobs and reduce the fleet by almost a third to return to profitability.
“The government takes extremely seriously any actions from any quarter that have disruptive and damaging impact on the normal functioning of the country,” Transport Secretary James Macharia said in a statement. The proposed strike is “economic and national sabotage and the government will use all the levers available under law to take action,” he said.
The state owns almost 30 percent of the airline, according to data compiled by Bloomberg.
KALPA’s position hasn’t changed since the strike was called on Oct. 11 and “there’s room for negotiations about those two people going,” union Secretary-General Paul Gichinga said by phone from Nairobi.
“With every passing day, it becomes very clear that Kenya Airways’s leadership lacks a clear vision, the right synergies and the willpower to lead the airline’s recovery efforts,” Gichinga said in an Oct. 11 statement. “A team with vital credentials in commercial aviation and business transformation urgently needs to be put in place to oversee Kenya Airways’s recovery.”