Court bars planned strike

October 14, 2016 11:32 AM

Kenya Airways planes are seen parked at the Jomo Kenyatta International airport near Kenya's capital Nairobi

A Kenyan court issued an order on Friday preventing pilots at loss-making national carrier Kenya Airways from going ahead with a strike next week, a lawyer for the airline said.

Shares in the company were also boosted by reports that the chief executive and chairman could be soon be replaced, meeting a key demand of pilots who have called an indefinite strike which is scheduled to start on Oct. 18.

The strike appeared in doubt after judge Nduma Nderi's order restraining pilots' union KALPA from proceeding.

After the ruling, KAPLA said in a statement its members were open to talks with the government to resolve the stand-off, but did not say if they had dropped the call for industrial action.

Kenyan broadcaster Citizen had earlier reported on its website that Chief Executive Officer Mbuvi Ngunze and Chairman Dennis Awori would exit by the end of the month, without giving a source.

By 1134 GMT, shares in the airline, part owned by Air France KLM and the Kenyan government, were trading at 4.50 shillings, up 3.45 percent.

"They are laying out plans to replace the senior management, that includes the CEO, this is based on reports that I am reading," Daniel Kuyoh, analyst at Alpha Africa Asset Managers, told Reuters when asked about the reason for the share rise.

Other traders and analysts echoed the comments.

There was no immediate comment from Kenya Airways about any management changes.

The principal secretary in the Transport Ministry, Irungu Nyakera, who represents the government on the board of the partly state-owned airline, said he had no new information.

"The priority now is to get the strike notice withdrawn," he told Reuters by telephone.

The government has said the strike amounted to economic sabotage. The union said its members had lost confidence in the ability of the CEO and chairman to end years of losses.

The airline said on Thursday it had halved its pretax loss to 5 billion shillings ($49.4 million) in the past six months thanks to a recovery in passenger numbers.

Eric Musau, analyst at Standard Investment Bank, said vital to any turnaround in the airline's fortunes was to secure new financing in the form of equity capital.

CEO Ngunze told Reuters last month the airline was talking to three or four foreign institutional investors and airlines about buying a stake, without giving details.