Kenya Airways to halt ticket sales

Bloomberg

Kenya Airways will stop selling tickets unless a pilots union calls off a seven-day strike to protest against Chief Executive Officer Mbuvi Ngunze as Africa’s third-largest airline strives to minimize losses from the walkout.
“The threatened action is already costing Kenya Airways significant losses as passengers have begun to make cancellations,” the airline part-owned by Air France-KLM said in an e-mailed statement. The costs associated with selling flights and then not carrying passengers will be too great a financial burden, the carrier said.
KALPA, as the union is known, is demanding the resignation of Ngunze and Chairman Dennis Awori, saying they aren’t capable of executing a turnaround of the unprofitable carrier. Similar industrial action by KALPA in April cost Kenya Airlines $2 million in a day, the airline said. The strike is due to start Oct. 18.
Halting ticket sales “means management would be preparing for an extended strike period,” Eric Musau, an analyst at Standard Investment Bank, said by phone in Nairobi. “The best case is for them to agree on some sort of settlement. I’m not really sure it is for the pilots union to say whether management should go or not.”
Kenya Airways first-half earnings to be released at the end of this month will show a reduction in net loss to 5 billion shillings ($49.3 million) from 12 billion shillings, the airline said, without referring directly to the CEO. In that context, the strike is “unjustified and uncalled for,” it said. The company, which reported a wider full-year loss to 26.2 billion shillings on soaring finance costs, plans to cut 600 jobs and reduce the fleet by almost a third to return to profitability.

Financing Headache
“Financing is the main headache,” Musau said. “Operationally they are turning around.” KALPA’s position hasn’t changed since the strike was called on Oct. 11 and “there’s room for negotiations about those two people going,” union Secretary-General Paul Gichinga said by phone from Nairobi.
“With every passing day, it becomes very clear that Kenya Airways’s leadership lacks a clear vision, the right synergies and the willpower to lead the airline’s recovery efforts,” Gichinga said in an Oct. 11 statement. “A team with vital credentials in commercial aviation and business transformation urgently needs to be put in place to oversee Kenya Airways
recovery.”