Kenya Airways (KQ) has inked a collective bargaining agreement (CBA) with the Kenya Aviation Workers Union (KAWU), resulting in a 10% pay increase for unionizable airport workers in 2024 and a 12% raise in 2025.
Allan Kilavuka, the CEO of KQ Group, announced that the pay hike, effective this month, will continue until 2025. Kilavuka stated, “This agreement provides KAWU members with a 10% increase in the first year and a 12% increase in the second year (totaling 22% over two years) on their basic salary, along with other allowances, during the specified period. The CBA is slated to cover the next two years.”
As of December 2022, KAWU had a total of 3,000 unionizable employees, primarily on short-term contracts. KAWU Secretary General Moss Ndiema expressed satisfaction, saying, “It’s a favorable deal for my members. I’m impressed. We commend the leadership of Mr. Kilavuka and the head of human resources, Tom Shivo, for restoring industrial harmony at the airline.”
However, the pay agreement will contribute to an increase in the company’s expenses, as salaries constitute a significant portion of its operating costs. In the financial year ending December 2022, KQ’s employee costs declined to KES 12.62 billion from KES 12.71 billion the previous year. In the first half of 2023, staff costs rose by KES 341 million.
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This pay raise occurs amid a trend where several companies are either freezing salary increments or resorting to job cuts due to declining sales and margins. KQ reported its largest half-year loss in August, attributed to substantial forex losses and a mounting debt burden disrupting its turnaround plan.
Despite a 56% revenue growth to KES 75 billion and a 43% increase in passenger numbers to 2.3 million, escalating costs led the airline to incur a deeper loss, exceeding KES 21.7 billion in the six months ending June 2023. This loss represents a 120% surge from the KES 9.9 billion losses reported in the first half of 2022 and surpasses the KES 15 billion full-year loss for 2021.
