KQ picks Pole to lead turnaround journey

Sebastian Mikosz, the new Kenya Airways chief executive officer. PHOTO | COURTESY
Sebastian Mikosz, the new Kenya Airways chief executive officer. PHOTO | COURTESY 

Sebastian Mikosz, the man Kenya Airways #ticker:KQ has picked to lead its turnaround journey, is a ruthless and well-known cost management hawk whose tenure at the national carrier is initially expected to further shrink the airline’s workforce and squeeze out fat from its various operating arms, the Business Daily can reveal.

Mr Mikosz, who takes over from Mbuvi Ngunze, faces the task of piloting the airline through its most turbulent terrain that is paved with a Sh145.8 billion debt and a loss-making streak that has persisted in the past four years.

The Pole, who jets into the country next week to meet KQ’s top management, should be relatively at home with the assignment given his previous postings, reputation and record.

The father of three started his aviation career in 2009 when the Polish government tapped him to head the country’s national carrier, LOT Polish Airlines where the State has 69.97 per cent stake.

The airline was at the time facing a bankruptcy, was losing passengers to rivals and had, like KQ, reported losses in successive years.

Mr Mikosz immediately cut staff numbers by nearly a third (bringing the head count to 3,000), boosted liquidity with the sale of idle assets and launched new routes that put the airline firmly on the recovery path.

LOT Airlines cut its net loss to Sh4.2 billion from the previous year’s Sh18.7 billion during his first year in office and passenger numbers grew for the first time in years.

It did not last long before he ran into trouble with unionised staff, who bitterly protested his attempts to cut salaries by 30 per cent through termination and amendment of contracts.

US publication Forbes, in a 2015 article, reported Mr Mikosz arguing that he felt the contracts were “unsuitable for the current market conditions.”

Mr Mikosz soaked in the pressure until February 2011, when he quit the job after the government expressed discomfort with the pace of turnaround and questioned some of his strategic decisions.

The turnaround manager got a second go at the job just two years later, when the government sought him out afresh to lead the business. The decision was made after his successors’ dismantling of his plans left the airline seeking a Sh22.4 billion bailout.

Upon his return, Mr Mikosz sent home another 1,500 employees and amended pilots’ contracts as part of far-reaching measures aimed at squeezing the last penny from every cost aspect of the business.

He returned the business to profit in 2014 and revised the rescue package downwards to the relief of his employers.

“I was never proud of having to reach for public assistance. But today I want to say that it was absolutely worth the fight. This was the first time in seven years that we got a good result,” he told Forbes.

Mr Mikosz’s experience will come in handy at KQ which, just like LOT, has government in the list of its top shareholders, a highly vocal union to deal with, is debt-burdened and fighting to cut expenses.

The 44-year-old Pole beat 11 other applicants from Kenya, South Africa, Australia, the United Kingdom and Germany who had applied for the job.

Michael Joseph, KQ’s chairman, said Mr Mikosz had met the key criteria — including a turnaround experience at a relatively young and energetic age — to run the company.

“He has experience running a State-owned airline with a fleet size and type as KQ. He has also dealt with serious trade unions in the airline industry and was by far the best candidate,” Mr Joseph said.

KQ has posted four consecutive full-year losses beginning March 2013 and in the year to March 2016, recorded a net loss of Sh26.2 billion.

Mr Mikosz comes in at a time when KQ is finalising its capital optimisation programme as part of a wider restructuring plan he will now be expected to take charge of and deliver.

Mr Ngunze, who has been KQ’s CEO for two years, will as part of the transition stay on as a KQ adviser until the end of July during which he, and Mr Joseph, will help Mr Mikosz gain an understanding of the business and its rescue plan.

“I wish to take this opportunity to offer Mr Ngunze our most sincere appreciation for his dedicated contribution, support and service over the past five years,” said Mr Joseph in a statement.

“He has led KQ during an extremely challenging period, but nonetheless brought his unique leadership skills to bear.”