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Kenya Airways plans widespread staff cuts

Kenya Airways is planning a mass cull of staff as it attempts to return the airline to an even keel and lower a cost base it says is at "unsustainable levels".

The carrier cites a "harsh operating environment" with lower passenger volumes, declining revenue, unstable fuel prices and "an increasingly competitive environment" for the move.

It will initially target staff for early retirement, before implementing a wider programme of redundancies, although did not provide details of the total number of job cuts.

Kenya Airways chief executive and group managing director, Titus Naikuni, says costs have been driven to "unsustainable levels" by collective bargaining agreements with staff.

"Despite various initiatives that we have put in place, our cost base continues to be extremely high. This coupled with other direct operating costs, have put pressure on our contribution margin reducing our overall ability to operate profitably," he says.

Kenya Airways says its employment costs have more than doubled over the last six years, rising from KSh6 billion ($71.2 million) in 2007 to KSh13.4 billion in 2012. Kenyan staff numbers rose from 3,729 to 4,170 during the same period, and overseas staff rose from 425 to 664. Total headcount stood at 4,834 at the end of the last financial year, it says.

Although some positions will be made redundant, other "non-core" activities will be outsourced, says the airline.

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