Kenya feels the shilling stretch

A NEW 25 per cent union pay rise deal for Kenya Airways workers will test the airline, which is also facing pressure to expand.

Airline management signed a collective bargaining agreement with the Airline Aviation Workers Union (AAWU) for a five per cent pay rise covering the period between 2008 and 2010 (2.5 per cent for each year), and another 20 per cent –10 per cent for each year for 2011 to 2012.

The amount will see the airline’s annual wage bill of Sh10.1 billion (US$108 million) increase by more than Sh1.2 billion ($12.8 million) by end of this year, pushing it to an all time high.

“The board has taken note of the anticipated traffic demand in 2011 and the pressures on yields due to escalating fuel prices,” board chairman Evanson Mwaniki said. “This implies that Kenya Airways has to implement appropriate strategies to enhance growth and profitability.”

The national carrier has expanded routes in an effort to battle against smaller airlines.
Kenya has opened routes including Chad, Italy and South Sudan.

In 2006 the airline signed a purchase agreement to buy nine 787 Dreamliners, and taking an option on a further four. The first delivery is expected at the end of 2013, when the airline is predicting a rapidly expanding route network and steady growth in passenger and cargo demand.

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