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Kenya Airways Pilots set To go on Strike from tomorrow

by Radarr Africa
written by Radarr Africa

Kenya Airways pilots under the Kenya Airline Pilots Association (KALPA) are set to go on strike from Saturday after the airline failed to address their grievances.

In a statement, the Association’s General Secretary Murithi Nyaga stated that from 6.00am, there shall be no Kenya Airways aircraft departing from the Jomo Kenyatta International Airport (JKIA) being flown by a KALPA member.

He indicated that the Kenya Airways management has not made any meaningful attempt to engage them and have the issues they raised addressed.

“On October 19 2022, the Association issued a 14-day industrial action notice to the management of Kenya Airways, as the last resort in our attempts to seek better working conditions for our members and ensure that Kenya Airways is managed professionally,” he stated.

“The strike notice has since expired and we are therefore at liberty to exercise our right to withdraw our labour forthwith as enshrined in Article 41, Chapter 4 of the Kenyan constitution.”

The Kenya Airways Board had said that none of the grievances advanced by the Kenya Airline Pilots Association(KALPA) merit an industrial strike.

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In a statement, the board noted that KALPA’s demands have changed from grievances on the suspension of the Provident Fund, the Ab Initio Loan fund, Annual Leave, and other issues to outright demands for the resignation of the Management team, particularly the CEO, Allan Kilavuka.

“The Board reiterates that industrial action is unnecessary at this point as it will delay and disrupt the financial and operational recovery, causing reputational damage to Kenya Airways,” the statement signed by KQ Board Chair Michael Joseph read.

The national carrier also noted that the negative impact of the strike would also affect thousands of employees and the vast ecosystem the airline supports.

Meanwhile, the Board underscored its full support and confidence in Kilavuka and the management in handling the matters at hand and the Company.

“The Board also remains committed to supporting Management to make good on the promises made during Covid-19 as the Company’s financial performance improves, evidenced by the resumption of full pay and the ongoing payment of the accrued deferred pay,” said Joseph.

The association had accused the airline of pilot victimization and harassment as well as unilateral withdrawal of the staff provident fund, non-adherence to Kenya Civil Aviation Regulations, and leadership and governance challenges.

In a press briefing held yesterday, KALPA said it will call off the strike if its grievances were addressed.

SOURCE: Capital business

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BusinessEntrepreneurshipKenya News

South Africa Massmart to shut down its three outlet Game stores in Kenya

by Radarr Africa
written by Radarr Africa

South African retail giant Massmart, which operates the Game Stores, plans to shut down its three outlets in Kenya, after rival supermarkets snubbed sale offers, giving a new dimension to the troubles facing the supermarket business in the region.

The firm has started talks with its staff ahead of the stores’ official shutdown, marking the end of its seven-year struggle in the market and adding to a growing list of local and foreign retailers that have closed shop in recent years.

The Johannesburg Stock Exchange-listed retail giant said on Wednesday that it did not find domestic buyers for its 14 Game stores in Kenya, Uganda, Tanzania, Ghana and Nigeria after putting them up in the market last year.

The retailer said in March last year it would also explore the option of engaging potential buyers to improve the performance of some of its stores under the management of investors and entrepreneurs with a better understanding of local market conditions.

“Massmart initiated a process over a 12-month period to investigate… the opportunity to sell our East and West African stores to local investors. Unfortunately, this initiative did not deliver a meaningful outcome,” the company said.

Kenya has become a tough market for retailers following the collapse of Nakumatt and Tusky’s, which had dominated for decades.

ALSO READ: South African Airways Returns its Operations in Kenya After 2-Year Break

Uchumi has also struggled to survive the cut-throat competition as deep-pocketed newcomers such as French retailer Carrefour and Quickmart battle for a space in the market. 

Anton Wagenaar, a director at the South African retailer, said the decision to exit Kenya was made in March 2020 and the supermarket commenced negotiations with various landlords to surrender their leases ahead of time.

Game vice-president of merchandise Neville Hatfield said the review had sought to “investigate, as a preferred option, the opportunity to sell our store to local investors”, but the initiative had “unfortunately … not yielded meaningful results”. 

“We have, therefore, initiated potential store closure consultations with our staff members in the potentially affected stores,” Mr Hatfield said.

The planned exit of retailer Massmart will add to the growing list of firms from Southern Africa to close shop in Kenya. It comes a few months after Shoprite, another Southern African retailer, closed shop barely two years after launching operations in Kenya. Shoprite cited underperformance of its supermarkets for the closure.

The firm said the underperformance was worsened by impacts associated with Covid-19. But fierce competition from cash-rich retailers such as Naivas, Quickmart and Carrefour in a sector, could also have contributed to the exit. 

Investment analyst George Bodo said most South African firms launch in the country without a proper understanding of the Kenya market demographics.

Mr. Bodo said unlike South Africa, Nairobi does not have a large thriving middle class.  “The retail penetration in Kenya does not seem to be growing,” he said, adding that the informal channels such as kiosks, open-air markets and local shops still rule.

“They don’t seem to get it right because they come thinking that the retail penetration here is huge. The South African and Kenyan markets are very different,” he said. 

Before that, the South African owners of Nairobi’s Fairview Hotel, Town Lodge and City Lodge Two Rivers also exited the Kenyan market over mounting debts. City Lodge revealed that it sold three hotels in Kenya and one in Tanzania to real estate investor Actis for a combined Sh1.0 billion.

The company indicated the East Africa units were loss-making to the tune of Sh2 billion as at the end of 2020. Earlier in 2017, Tiger Brands, also of South Africa, left the Kenyan market after disposing of its 51 percent stake in the local unit, Haco Tiger Brands, to late billionaire businessman Chris Kirubi, who then held the remaining 49 percent share.

The firm also stated that Kenya was a difficult business environment, leading to its exit.

SOURCE: Business daily

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AviationBusinessEconomyKenya NewsTransportation & Logisitics

KQ Defends Its Aircraft Leasing commercial business agreements

by Radarr Africa
written by Radarr Africa

Kenya Airways (KQ) has said that its’ aircraft leasing agreements have saved it billions of shillings in maintenance and operations costs.

The national carrier said in a statement that leasing contracts for aircraft are purely commercial business arrangements entered into by airlines and lessors worldwide.

“Lessors contracted to KQ for leasing of aircraft and engines are all renowned international companies that manage hundreds of aircraft leased to different international airlines across the world,” the national carrier said.

Currently, KQ employs two types of leases such as finance and operating leases.

“Because of the complexity and size of the lease, financiers typically prefer to use Special Purpose Vehicles (SPVs) to facilitate the finance leasing transaction. The setting up of SPVs is standard industry practice, as evidenced in relevant IATA aircraft financing literature, and is a regular practice for significant asset financing,” it adds.

According to KQ, SPVs are a long-term financial lease with an option to purchase aircraft at the end of the agreement.  KQ currently has two SPVS such as Tsavo and Samburu.

Operating leases are a legal agreement between two parties, a lessor and lessee, where the lessor agrees to provide the aeroplane to the lessee (KQ) for a set period of time in exchange for regular payments called rentals or lease payments, KQ added.

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“KQ deals with the following international renowned lessors; Dubai Aerospace Enterprise (DAE), AERCAP, Bank of China (BOC) Aviation, China Development Bank (CDB) Leasing, Deucalion, Macquarie, Aviation Capital Group (ACG), Goshawk, Nordic Aviation Capital (NAC), Azzora, Chorus Aviation, NAC and Montrose.”

Currently, the firm has leased 35 aircrafts comprising 18 (finance lease) and 17 (operating lease).

In the last financial year, the airline said that it saved Sh11 billion after changing aircraft leasing agreements from fixed costs to hourly rate.

In the first half of 2022, KQ posted a Sh9.8 billion loss, highlighting its economic challenge.

SOURCE: Capital business

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AfricaBusinessEastern AfricaHospitality, Travel & TourismKenya

Kenya Airways suspends London route ticket sales

by Radarr Africa
written by Radarr Africa

Kenya Airways has suspended the sale of tickets from London to Nairobi, as pressure from the Heathrow crisis hits the national carrier.

The suspension follows a directive by Heathrow Airport instructing airlines to freeze outbound bookings until September, as it grapples with a surge in the number of passengers using the facility amid a shortage of manpower to manage the situation.

The turmoil in London, says the carrier’s top executive, may also see the national carrier cancel some flights to the UK in line with the new requirement by Heathrow, which is one of the world’s busiest airports.

According to a report by Busines Daily, KQ managing director Allan Kilavuka disclosed that they will not make new bookings going forward until the ban is lifted, but will fly passengers who had already made earlier reservations.

“They have asked us to close new sales from London, which means we should only fly the tickets already sold up to now,” said Mr Kilavuka.

Heathrow has capped the number of passengers who can depart from the airport to 100,000 daily to manage travellers at the security checks and minimise delays that could see them miss their connecting flights.

The summer period in Kenya, which normally starts around July and extends to August normally records high bookings from international tourists, however, the last two years have not been good for the country’s tourism sector owing to Covid-19 restrictions that discouraged people from travelling.

Last year, a total of 53,000 visitors toured the country from the UK, placing Britain at position four in terms of the leading tourists that visited Kenya, behind the US, Uganda and Tanzania.

Major airports in Europe have been grappling with a sharp rise in the number of passengers on the back of a shortage of workers, as the airlines and aerodromes struggle to recruit back after cutting jobs at the height of Covid-19 in 2020.

Schiphol Airport in Amsterdam has already capped Kenya Airways’ outbound passenger capacity at 22 percent per flight this summer forcing the carrier to fly with empty seats despite high demand.

ALSO READ: IATA Frowns at Schiphol Flight Restrictions

The disruption in Europe comes at a time when the carrier has been making some progress in terms of revenue, however, the latest turmoil in the industry could see the airline take longer to revert to profitability.

KQ narrowed its net loss for the year ended December by 56.58 percent on higher revenue as travel picked up with the easing of Covid-19 restrictions.

The national carrier reported a net loss of Sh15.8 billion in the review period compared to a net loss of Sh36.2 billion the year before when travel restrictions hit operations hardest, including the grounding of its planes for months.

Total revenue in the review period bumped 32.98 percent to Sh70.22 billion, partly lifted by alternative sources such as air charter services which jumped 300 percent and helped compensate for income lost because of travel restrictions on some routes.

Source: Business Daily

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