KQ silent on send-off package offered to sacked finance boss

Mr Alex Mbugua, former Kenya Airways finance director. PHOTO | FILE
Mr Alex Mbugua, former Kenya Airways finance director. PHOTO | FILE  

Kenya Airways has declined to disclose the send-off package offered to Alex Mbugua who was on Tuesday dropped as the airline’s finance director after eight years in the key position.

Mr Mbugua was among the national carrier’s top earners who could take home tens of millions of shillings if the loss-making airline pays him a generous severance package.

KQ also declined to reveal whether his exit was related to the company’s sustained poor performance, expiry of his contract or if it was in response to calls by the Treasury for top managers to exit as a precondition for the release of a bailout package.

“It is too early in the day to talk about this (Mr Mbugua’s departure),” KQ chairman Dennis Awori told the Business Daily when reached for comment.

Attempts to get KQ’s management to shed light on the issue were similarly unsuccessful by the time of going to press.

Mr Mbugua and the airline’s former chief executive Titus Naikuni were highly paid during their tenure, which coincided with a rise and then plunge in fortunes of the company.

In the year to March 2014, the duo took home Sh103 million in salaries, a 33.8 per cent increase from the Sh77 million they were paid the previous year.

The pay was out of tandem with Kenya Airways’ performance, as the national carrier posted a Sh3.38 billion loss in the financial year to March 2014 and a Sh7.84 billion loss in a similar period in 2013.

Mr Mbugua and Mr Naikuni, who recruited him to the chief financial officer (CFO) position, collectively pocketed Sh391 million between 2010 and 2014.

Mr Mbugua was appointed CFO in July 2008.

The airline posted a loss of Sh4.08 billion in the year to March 2009 compared to Sh4.58 billion profit the previous year. KQ’s fiscal year begins on April 1.

In Mr Mbugua’s first full year in charge as CFO (April 2009 to March 2010), the carrier swung back to profitability posting a Sh2.03 billion profit and further increased to Sh3.53 billion the next year.

However, profitability dipped the following year to Sh1.66 billion before the carrier slipped into losses, peaking at Sh25.74 billion recorded in the year to March 2015.

Mr Mbugua will, however, be mostly be remembered as the key person in charge of Project Mawingu, a 10-year expansion plan that the airline rolled out in 2011 but which has since all but collapsed.

The former CFO chaired the strategic planning committee that developed the project and thereafter presided over the capital raising — both debt and equity — to fund the ambitious plan.

Project Mawingu’s aim was to position Nairobi as a hub for flights from the East, notably China and India.

Planes were acquired on expensive credit, whose costly repayments left the airline in a debt hole of Sh147.8 billion as of March last year.

The Kenyan government, one of the airline’s top shareholders, is in talks with KQ to determine a long-term financing package that would add to the Sh4.2 billion it already gave them in May.

The Treasury, however, asked that top managers resign from office as a pre-condition for release of funds.

These changes are seemingly underway at KQ with Mr Mbugua’s departure coming a couple of months after the firm dropped Gerard Clarke as the commercial director and later instituted a reshuffle of its top management team.