Kenya Airways (KQ, Nairobi Jomo Kenyatta) will cut 600 jobs from its workforce as part of its "Operation Pride" turnaround programme formed in the wake of a record KES25.7 billion (USD251 million) loss for the full-year period ending March 31, 2015.
Airline CEO Mbuvi Gunze told a news conference in Nairobi this week the plan aims to generate savings of about USD200 million, half of which will come from cost reductions with the remainder through staff and capacity cuts.
"In light of the foregoing, we will embark on a restructuring process that will result in approximately 600 members of staff being declared redundant or redeployed elsewhere," the airline said.
Aside from the sale of a 30-acre piece of land in Embakasi, Nairobi, Kenya Airways has also begun reducing its fleet from fifty-two aircraft, to thirty-six with two B777-200(ER)s having been sold to Omni Air International (OY, Tulsa International), three B777-300(ER)s sub-leased to Turkish Airlines (TK, Istanbul Airport), two B787-8s sub-leased to Oman Air (WY, Muscat), and a pair of E170s heading to Eastern Airways (T3, Humberside). A parked B767-300(ER), 5Y-KYX (msn 24484), has also been put up for sale.
The carrier's London Heathrow slots have also been sold off to Oman Air with London operations to continue using slots leased from Air France-KLM Royal Dutch Airlines.
Nairobi estimates the carrier requires between USD500-600 million in recapitalization to help return it to profitability. Thus far, Kenya Airways has already drawn down half of its USD200 million bridging loan with Afreximbank while the Kenyan government, which holds a 29.8% stake in the airline, has already injected USD43 million.
Kenya Airways is being assisted in its reorganization by McKinsey & Co. while PJT Partners Inc. has been appointed to advise on the restructuring of the company’s balance sheet and to raise long-term financing. New York-based turnaround specialists Seabury, which were part of the initial planning process, are understood to have ended their contract with the carrier.
