KA-INVESTOR
For three days now I’ve been following the Kenya airways strike with a very personal interest (as a shareholder and having a close family member as a passenger). A 21 days strike notice was given and expired exactly at midnight on Friday August 14, 2009. The workers union 130% raise demand (unreasonable!) was only able to be met by an 8% increase (only!) from KQ’s management. The difference set the stage for one gruesome workers strike.
KQ management tried every trick in the book to avert the strike, including a court injunction banning the strike and negligible increase to the initial 8%. But by then the strike was inevitable. And they’ve had to settle for a 20% salary increase that will see the airline spent an extra Ksh.900 Mln on these increases.
The international departure section at JKIA, on Saturday morning was a total mess. Long disorganized queues to nowhere characterized the airport. I dropped off a passenger at 6.30am for a 9.15am flight, but by an hour after departure time she had not even check-in. and even after checking in and waiting for the flight the whole day (with little communication on the flight’s fate) the flight was cancelled. As I write this her flight has not yet taken off.
What is the implication of this strike to KQ and its stakeholders? It’s obvious that the airline has been set back several hundred millions (estimated to be over 400 million) in revenue over the last three days. This may take KQ months to recover (that is if they ever recover the Ksh.5.66 bln loss reported in its previous year). Then there is the issue of lost customer confidence, which I don’t know how they will work around this.
Despite KQ recovering a little bit from the oil edging deal that contributed largely to their losses in the previous year, the workers strike this year will surely make their recovery much difficult, if it won’t contribute to another loss.
A detailed analysis @BusinessDaily
