Business

Kenya Airways CEO ties return to full pay on debt restructuring

Kenya Airways CEO ties return to full pay on debt restructuring

Kenya Airways (KQ) Chief Executive Allan Kilavuka says reinstating full salaries for employees will depend on sustained revenue recovery and renegotiating debts with creditors.

He says the airline has seen an improvement in revenues but not enough to lift the current 30 per cent pay cuts as is being pushed by Kenya Airline Pilots Association (Kalpa).

Mr Kilavuka likened the airline’s current situation to a patient who is showing signs of moving from the intensive care unit (ICU) to high dependency unit (HDU) and must not be rushed “to go exercising”.

“Even I would like us to go back to full pay because I have never been paid my full salary since I joined the company,” the CEO said in an interview with Spice FM on Thursday.

“We need to survive, we need to get out of the ICU. Now is not the time to go exercising, it is the time to ensure we are being treated to move out of ICU to HDU. To do that, we need to conserve cash.”

The airline owed suppliers Sh31.55 billion by end of December last year while Sh102.53 billion was owed to lenders.

Kalpa’s call for return to full pay has come when domestic flights are at 90 per cent capacity while international ones are at 52 per cent - a stark difference from last year.

Kilavuka said going back to full pay requires balancing other obligations such as agreeing with suppliers and banks on how to restructure the debt still owed to them.

He said KQ has managed to pay 70 per cent of salaries because lenders have been “very gracious by deferring all the payments” on loans due.

The airline is negotiating with creditors so that the debt is restructured and afford KQ a repayment schedule that will not strangle operations.

“As revenue increases and we are able to negotiate with our lenders and suppliers, that will be a sweet spot. Covid-19 took a very bad situation and made it much worse,” said Kilavuka.