Kenya Airways Begin Pay Cuts as Government Bailout is Delayed

Kenya Airways has struggled with a debt burden which was further worsened by the flight restrictions during the COVID19 lockdowns. At the end of 2020, its debt stood at $850 million. In its budget announcement in February, the Kenyan government allocates a fresh injection of $236 million to the airlines.

However, wages across the company will have to be slashed, as it embarks on a cash preservation move to ensure that it continues operations, with the promise that it settle all outstanding payments once Treasury makes good on the 2022 bailout. The bailout comes as the State dropped the nationalization plan, which was approved by lawmakers in July 2019 and would have led to the delisting of the airline from the Nairobi Securities Exchange (NSE). Under the terms of the bailout, it is expected that the airline will reduce its network, operate a smaller fleet, and possibly lay off more staff.

A memo from CEO Kilavuka to staff reads “We are still constrained financially and in the interest of prioritising staff salaries, the February 2022 salaries will be paid in percentages similar to the percentage paid in November 2021. We will owe the percentage not paid which the company will pay when we receive the funding from the government. As I advised, we are yet to receive the disbursement of funds intended to support the company to strengthen its cash flow, support operations and speed up the reforms in the airline.”