KQ contracts global headhunter to hire new chief executive

Kenya Airways has contracted an international head hunting firm to hire a new chief executive even as the national carrier gears up for what will be a critical year in its turnaround plan.

Michael Joseph, the airline’s chairman, said in an interview that the “renowned” recruiter has kicked off the search for a suitable candidate globally ahead of the target of having a new CEO in place by April.

The new CEO, who is likely to be an expatriate, will join KQ, as the airline is referred to by its international code, at a critical juncture of its turnaround plan; just after it has completed its balance sheet reorganisation and looking ahead to the Sh60 billion recapitalisation of the company.

“We’re using an international headhunter who has been engaged by KQ and Vodafone before. They have already started the search,” said Mr Joseph, adding that this approach is better than advertising the position.

“KQ is looking for a turnaround specialist, somebody who will improve the company’s performance. We want an airline executive who has experience in the sector. That is why the person we pick is likely to be an expatriate.”

The Nairobi Securities Exchange (NSE)-listed airline has in recent years come under pressure due to expensive loans and fuel hedging pacts, low tourist numbers, foreign exchange losses and the Ebola outbreak among several other negative factors.

The airline, which is 29.8 per cent owned by the Treasury and 26.7 per cent owned by Air France- KLM, has posted four consecutive full-year losses beginning March 2013. In the year to March 2016, it recorded a net loss of Sh26.2 billion.

KQ, with the assistance of US consultancy McKinsey, is implementing a back-to-profitability plan, which involves actions like the sale or lease of aircraft, balance sheet restructuring and staff cuts among others.

READ: Mbuvi’s exit paves the way for return of an expatriate boss at KQ

But as the airline targets fresh capital injection later in the year, management is first restructuring its balance sheet to create liquidity and lower its level of debt.

As at September 2016, KQ had Sh116.7 billion in long-term borrowings and another Sh29 billion in short-term debt, credit which continues to strain operations of the cash-hungry business.

“The plan is to have completed the financial restructuring by the time the new CEO is coming in. We cannot expect the new person to engage in that,” said Mr Joseph.

“We had some good meetings in Washington DC early December with some of the financiers and we are hopeful that we shall also complete the process by April 2017.”

Once the balance sheet restructuring is completed, the incoming chief executive and the airline’s board will have to turn on their charm to attract Sh60 billion.

Mr Joseph expects the recapitalisation process to be finalised “by the end of the year” as well as renegotiating the joint venture agreement KQ holds with KLM, its partner and major shareholder.