Kenya Airways CEO, Staff to Take Pay Cut as Virus Batters Sales

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Kenya Airways Plc. will cut salaries of executives and staff starting next month to combat a slump in revenue amid the coronavirus pandemic.

Chief Executive Officer Allan Kilavuka will take an 80% pay cut, to be reviewed on a monthly basis, while senior management including board members will have their salaries reduced by 75%, according to an internal memo seen by Bloomberg News and verified by the airline. All staff face some reduction in wages, Kilavuka said in the note to all employees dated Friday.

Kenya Airways has suspended about 65% of flights due to reduced demand for air travel “and this is changing by the hour,” the CEO said in the memo. “Our passenger numbers are also reducing exponentially and have greatly impacted our revenues.”

The decision to ground planes and place about half the fleet in long-term storage is in line with moves taken by carriers around the world. The industry is among the worst hit so far by the coronavirus, which has killed more than 11,000 people globally and is spreading rapidly. Several governments have banned flights from high-risk countries, while all travel is being discouraged to try and contain the pandemic.

Cash Strapped

The coronavirus crisis comes at a time that Kenya Airways was already strapped for cash, and the airline last month agreed to borrow about $50 million from the country’s government, its biggest shareholder. The carrier has made an annual loss since 2013.

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Senior management will work one paid week for every three without wages, while lower level staff will get two weeks salary for every two without pay. The airline is not firing employees at this point.

“Should this trend continue – and current indications show that it will – we will have to make the difficult decision to temporarily suspend our operations,” Kilavuka said. “We are in unfamiliar territory and are constantly and carefully evaluating our options.”

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