Titus Naikuni the CEO of Kenya Airways (KQ) defied an executive order from the Government of Kenya and proceeded to retrench/declare redundant about 600 of its’ employees in its’ staff rationalization program. Naikuni ignored an order issued by Prime Minister Raila Odinga directing the airline to halt the retrenchment plan until it negotiates with the union or explores other cost cutting measures other than trimming its workforce.
Naikuni has also twice failed to appear before a parliamentary the Labour and Social Welfare Committee probing the retrenchment. A parliamentary committee powers are equivalent to those of a High Court .
While sacking a large number of Kenyans was swiftly undertaken, the same Naikuni is at the same time leading KQ into hiring flight attendants from India, Rwanda and Ghana in addition to the existing foreign crew from Ghana, Cameroon and Thailand, who have ‘The Pride of Africa’ to thank for creating employment in their respective countries.
The KQ retrenchment exercise is nothing less than an ethnic cleansing exercise going by the large number of employees from certain regions who have been handed their lay-off letters.
It is instructive to note that the Ministry of Labour has since declared the recent retrenchment at Kenya Airways (KQ) as illegal and termed the exercise as “cruel and barbaric.” Speaking before the Parliamentary Committee on Labour and Social Welfare, Labour Permanent Secretary Beatrice Kituyi said from her Ministry’s investigation there was no dialogue or pre-retrenchment counseling for staff, which went against the normal retrenchment process under the law.
Predictably, Minister for Transport Amos Kimunya, who also appeared before the Committee, supported the retrenchment exercise by the airline and insisted that due diligence was followed adding that the exercise was necessary because KQ could not sustain labour costs. Kimunya also supported ethnic profiling of top positions at Kenya Airports Authority and Kenya Ports Authority so his position on KQ retrenchment did not come as a surpruse given that he also appears to be shielding Titus Naikuni as he goes about victimizing innocent KQ employees who are now being unfairly retrenched on basis of ethnic origin.
To quote some of the reasons given for this cruel and barbaric Naikuni staff retrenchment exercise, it doesn’t take much to see where the real problem lies. ‘…downturn in passenger volumes occasioning sharp shortfalls in expected revenue streams…increasingly competitive environment… direct operating costs being very high, employee costs and other overheads continued to rise disproportionately to rise in revenues..’ If indeed Kenya Airways is in such a precarious position, how did it get there?
During Naikuni’s reign at KQ, the airline has lost its leading position as an African carrier when it once boasted of having the the youngest fleet in Africa, Kenya Airways now plays second fiddle to Ethiopian Airlines (ET). Ethiopian also overtook KQ’s position as the launch customer for the Dreamliner aircraft. Naikuni now believes it is better for him and his top management to earn kick-backs from Embraer of Brazil whileET will have 5 Dreamliners by next month, and by the time Kenya Airways acquires its first one, our ET will be boasting a fleet of 10 dreamliners,
To underline their superiority over KQ, ET also boasts of fleet of 5 brand new Boeing 777-200LRs compared to the 4 Boeing 777s Kenya Airways has had since 2004. Between 2004 and 2012, Naikuni has been busy acquiring vintage Boeing 767s in warped strategy to be seen as appeasing the Board as saving money. This shortsighted and unprofessional thinking has put the airline in the pathetic position it is in now.
It is also a poorly kept secret why Naikuni and some top directors have embraced Embraer of Brazil. Some managers are receiving millions of dollars in kick-back when they approve acquisition of unsuitable aircraft from Embraer. One wonders why Naikuni ignores professional advise from technical team and industry players who are concerned about the large numbers of aircraft on order vis a vis KQ route structure and passenger profile.
The pilots, having looked at some of the planned routes for this aircraft have since raised fears that this will exacerbate an already serious problem of misconnecting passengers’ baggage and cargo. While the Embraer is a pretty ‘bird’ it is unable to operate out of high altitude JKIA with substantial payload, even for the routes it is planned for. Is the Embraer the aircraft of choice in an environment littered with Dreamliners and Airbus A380s?
Naikuni is once again setting up a low-cost subsidiary that would operate on domestic and regional routes, by the name Jambo Jet. Other than a name change, does Naikuni have any viable plan to make this Jambonet profitable?
Aircraft that operate on this business model often operate with minimum set of optional equipment, further reducing costs of acquisition and maintenance, as well as keeping the weight of the aircraft lower and saving fuel. Often, no in-flight entertainment systems are made available and some airlines even use only nonreclining seats. For example EasyJet’s aircraft cabins are configured in a single class, high-density layout. The airline’s main fleet, comprising Airbus A319 and A320 aircraft, carry up to 156 and 180 passengers respectively, depending on layout. A typical A319 carries 140 passengers in a single class configuration. FastJet (as Fly 540 is soon to be known) will be operating these same A319s.
Naikuni led Kenya Airways plans to compete with its newly acquired Embraer 190s. These aircraft, other than having leather seats, have full touch-screen on demand entertainment systems for each passenger and are configured in two classes, business and economy carrying a total of 96 passengers with 12 in business class. Is Jambo Jet really going to be able to compete with other low cost carriers with this equipment? Again, according to KQ management, Jambo is supposed to operate all flights falling under 4 hours flight time duration. Out of 56 destinations that Kenya Airways operates currently, about 80 percent are destinations within the Africa region of which about 93 percent fall within the 4 hour flight time range. Are we seeing the silent and deliberate killing off of Kenya Airways for the birth of JamboJet?
The main reason given for the problems bedeviling Kenya Airways is employee costs. A casual look at the financial results for the year ending March 2012 will reveal that there was a rise of a mere Sh2.2 billion in employee costs, while there was a staggering rise of almost Sh24 billion in Direct operating costs. While most of this was attributed to fuel costs at 40.7 billion, there is still another 36.5 billion that is not accounted for. Is the cost of delayed flights and hotel accommodations included here? Is the cost of misconnected baggage included here? Is the cost of cancelled flights included here? According to European Union regulations (EU Regulation 261/2004) passengers can get up to €600 as compensation for flight delays. That amounts to Ksh. 20 million per delayed/cancelled flight. The point here is, if management dedicated half the effort towards addressing this cost as it does towards employees costs, Kenya Airways might just get on the right path.
Kenya Airways corporate culture leaves a lot to be desired. Whatever the industry, the best companies have at least one element in common: a highly motivated, enthusiastic workforce that delivers exceptional service day after day. Most successful airlines have demonstrated the value of fully engaging every employee. Kenya Airways is bedeviled with employees that have low morale, and are constantly looking over their shoulder to avoid losing their jobs. Engineers in particular have been frustrated to the point that they are constantly looking for jobs with middle eastern carriers. Delays caused by technical problems can attest to this. When it comes to flight attendants, management has decided to outsource this essential service, a practice that stands in diametric opposition to good corporate culture. It is still a mystery where Career Directions Ltd sprouted from.
While Kenya Airways is a private company listed in the stock exchange, it still is a Kenyan company and as such must comply with the laws of the land. The work permits and crew certificates issued to foreigners have directly led to the retrenchment of Kenyans who have performed the same tasks for the last 20 years.
The Government of Kenya to act within the democratic framework of this republic and hence ensure that its actions protect, and do not in any manner undermine, the livelihood of the working people of this country who constitute the republics vast majority.
Pilots/crew members and senior management have openly stated that they no longer have confidence in Naikuni’s ability to successfully restructure the company and lead it to profitability.
Naikuni has also influenced KQ management to outsource some of its core business to private firms that he has interest in.
How long will this man Titus Naikuni be allowed to gamble with a strategic institution as Kenya Airways?