By Courtney Trenwith
The new CEO of the gov’t-owned airline reveals plan to make the company profitable within 3 years
Government-owned Kuwait Airways will cut 1,000 jobs this year as it works to reduce significant losses and eventually return a profit, the carrier's new CEO has revealed to Arabian Business.
All of the retrenched employees will be foreigners and from “not very senior” positions, Rasha Al Roumi said.
The airline is presently assessing each department to identify positions it can cut and staff are expected to be informed within three to four months.
“This is what we are doing now... as quick as possible because we are rebuilding the company and from next September we want to start the company in good shape,” Al Roumi said.
The airline’s first female CEO, who took control in December, said eventually she would like to reduce staff numbers even further.
“My target is [to reduce headcount to] 4,500 but I can’t do that this year,” she said.
The airline is undergoing a major restructure after two decades of being burdened with old, inefficient aircraft, staff protectionism and a bloated workforce of 6,000.
It has signed a memorandum of understanding with French aeroplane manufacturer Airbus to lease 12 aircraft from the end of the year, while it waits for an order of 25 new planes to be delivered from 2019.
Its present fleet includes planes that are more than 20 years old.
Last year, the Kuwaiti government paid off KD441m ($1.55bn) worth of debt accrued by Kuwait Airways in preparation to sell the national carrier.
The debt had been accumulated since 2004.
Al Roumi said it would take at least three years to make it profitable.
Kuwait’s parliament first approved a plan to privatise the loss-making carrier in 2008 but the process has been repeatedly delayed.
Dismiss 1,000 people? Sounds like mismanagement iof the same amount of work can be done with so much less staff. USD 1.5 billion confirms this thought in my view.
Cuts made arbitrarily to achieve an overhead target seldom deliver desired outcome. Without some root-cause analysis to understand a) what the current problems are, including customer carrier preference & b) best practices to deliver change - the certain outcome of cuts to reduce cost is loss of efficiency (in the short term) and ultimately return to equal if not increased cost base as part of unplanned response to failing delivery. Plan twice, execute once. Learn from other organisations experience, there are well documented cases.
The bloated 6000 is the result of continuous stagnation from progressive agenda. And just when the progress is on the agenda, the 4500 are targeted to be laid off.
In aviation business either you are 'nose heavy' or 'tail heavy', but to claim that you are bloated in the middle, and so you will lay off staff, is like dumping fuel while you are still on ground.
Because when the new aircrafts will come, either through lease or through purchase, you will need all the 4500 back on board. Unless you are saying that you need to reshuffle these 4500 so that you can show immediate cost reduction or a rosy balance sheet. But unfortunately this merely means that even the commander at the helm of the ship is made to feel insecure in this position and situation which influences decision making at the top.
Dear Ms Roumi,
Congrats on taking over the responsibility of KA.
But, apart from staff reduction, you have to sit down
and really think about other more important matter's
that would bring the Airline back from the red !
Wish you all the Best.
KAC was being run by innumerous departments; created only to make one national Director for each dept. Then as per the standardized organogram, each Director would have Deputy Director(s), Asst. Directors, Managers with each one having at least one Secretary and all of them without any developmental planning, forecasting, etc., work. With the Golden Handshake/Retirement in 2011 giving 3 years' salaries to Kuwaitii staff who worked more than 20 years, when the Privatization was revived, so many secretaries and ancilliary staff like Messengers, Drivers, Tea boys, etc., became redundant. Apparently KAC will get rid of these at first.
Now all junior Kuwaiti staff have been promoted as (acting) Directors and (acting) Asst. Directors; and with the help of IATA Consultancy these novices are planning for the future of KAC! Professional expats are totally blindfolded, with no involvement in re-structuring! We don't know how far this will take KAC to. Best of luck anyway.
"All of the retrenched employees will be foreigners and from â€œnot very seniorâ€ positions, Rasha Al Roumi said."
In my 40+ years of experience in this region, it would probably have been more profitable and productive (since most of the real work is done by the lowly paid expats anyway) to have made redundant 10-20 unproductive local employees (with ridiculous salaries) to have achieved the same effect without adversely affecting the airline.
I know this might invite howls of indignant protests but this is the reality of this place!
It is not only people or equipment!! Add to that processes and technology! It would be easier to build a new private airline in parallel to, gradually, fixing the national flag carrier! This is if the aim is to invest in the aviation industry!!
Usually streamlining companies comes from improving efficiency. What should be done, to give all a level of comfort of the immediate change, is to reduce staff period. Limiting inefficiency to expats, is rather counter productive and gives no comfort. The KAC staff is Kuwaiti in majority, does that mean the expats are redundant ? and without them KAC would function better? I doubt. the first step of a cure is to be candid with oneself. In my view, ALL staff should be replaced, beginning with management who allowed this deterioration to occur.
after all this is my opinion.
I feel they should cut down the planes too..
It would be more profitable and productive if we get rid of unproductive people who over stay 40+ years with detoriating mental and physical health.