CEO with a LOT to offer…

One of the leading airlines in Africa, KQ has been making losses in recent years, which might be one of the reasons that led to the early retirement of Titus Naikuni in 2014.
His deputy, Ngunze Mbuvi, took over the hot seat in the same year and began implementing a comprehensive turnaround strategy dubbed ‘operation pride’.
The programme aimed at taking the airline back to profitability by undertaking financial restructuring, cost-cutting measures, staff retrenchment and fleet downsizing programmes. According to KQ’s management, the double impacts of terrorism and fuel hedging were the major causes contributing to the airline’s poor financial performance.
Though Mbuvi managed to achieve some encouraging results in reducing the airline’s heavy losses, employees were not happy with the staff retrenchment programme and were at loggerheads with the management.
The disgruntled Kenyan Pilots Association accused KQ of bad management decisions and demanded the removal of the executive management members. A series of strikes forced the board chairman, Dennis Awori, and Mbuvi, to resign at the end of 2016.
Kenyan President, Uhuru Kenyatta, appointed former Safaricom boss, Michael Joseph, as KQ board chairman but Mbuvi had to soldier on until the board could find the right person to take over the hot seat.
After a long and thorough evaluation, the board elected Sebastian Mikosz, the Polish CEO who turned around LOT Airlines, as KQ’s new CEO and group managing director, in May this year.
Mikosz, who oversaw the successful turnaround strategy of LOT, Poland’s national flag-carrier, took up his new appointment in Nairobi on June 1.
Although it is still early days ¬– too soon for him to discuss any detailed plan of how he will revive Kenya Airways – Mikosz has two clear priorities.
“At the moment my vision for the airline is general. There are two things that I want to focus on,” he said. “First, I want to continue the job that was started by Mbuvi, my predecessor, and the board since 2015. There were a lot of very positive changes made during the restructuring programme.”
Mikosz’s second task will be focusing on work to be done in the coming years. He has a personal passion for growing and developing airlines.
According to Mikosz, the African air transport market is very challenging. However, he said there were many encouraging developments taking place. In his view the African middle class population was growing and more people were using air transport.
“Kenya Airways has a modern fleet. We have very good personnel. We have experienced pilots. There is a very good MRO. There is a new modern airport. It is rebuilt and opened recently. So I believe we have all the ingredients to make a success of a nice airline.”
For Mikosz, the most important thing is the determination that KQ personnel have to change the airline.
“All the staff I have met and discussed things with are determined to work hard to change the situation,” said the CEO. “My plan is to help them change the airline – to turn around and grow the airline.”
Since he took office, Mikosz has been meeting members of the management team and other staff to learn about the airline and discuss the way forward.
He does not want to talk about the factors that made KQ a loss-making airline. “I do not have any idea about that and I do not want to speculate. I will have my vision on that but my job is not to analyse the past. I have to prepare for the future and implement.”
Mikosz wants to focus on what the management is going to do in the next three or four years. He said they should turn the airline back to profitability in a permanent way. His task includes growing the airline, increasing connectivity and creating jobs.
“We have to make the shareholders happy – make them feel comfortable about the airline and their investment. At the end of the day, that is the most important thing; it is business.”
Mikosz said Kenya Airways is a business entity with broader scope and vision. “An airline with the name of a country in it is always very important for the country. It is a symbol. Emotion is connected to the airline. But then we are coming to money always. So my job will be to combine all of these elements,” he said.
The Kenyan Government and Air France KLM, which have a 29.8% and 26.7% stake respectively, are the major shareholders. The remaining shares are held through the Nairobi Stock Exchange.
“You should not forget that we have shareholders. For me, all the shareholders have equal importance. My focus will be on making their investment profitable. That is my job as a CEO.”
Aviation stakeholders wondered if Mikosz would introduce a new turnaround strategy or if he would think more on ‘operation pride’. However, the CEO said: “I have not made up my mind on that. We are really in a transition period.”
Mikosz said Kenya Airways has a business strategy. “There is a business plan. If I decide to change that and to introduce something new then I will start a discussion with the board and management team. I have not yet decided. As soon as I have something new on the table I will communicate it but for the time being I have not developed a new plan.”
When asked why he decided to take the hot seat at KQ, Mikosz explained that every decision is made out of two elements – the rational and emotional approach. “The rational approach is that my experience in the airline industry can help me change the situation in KQ. Turn around strategy is something I have done in the past.”
Speaking of the emotional approach Mikosz said Kenya Airways was a symbol of Kenya and Kenyans wanted their airline get out of trouble and fly high again. “And I want to help them do that. As a CEO my task will be coordinating the various efforts to change the airline. That is the emotional part.”
According to Mikosz, Kenya Airways has an immense potential to grow. “Kenya has a big tourism industry. Nairobi, with all the big financial institutions and international organisations, is an important city in the region. There is also a growing manufacturing sector. Considering all these facts, with the right business strategy and committed staff you can grow the airline.
“It is going to be a beautiful challenge for me,” he added.
Mikosz is optimistic that, together with his management team and the board, he can take the airline back to profitability. “I am always optimistic. Optimism is part of my structural DNA. I believe that when people have good will and work together they can make a difference.”
When Mikosz joined LOT as CEO, the airline almost went bankrupt. He said there were long list of problems with the airline. “Honestly, I could list only few good things. With team optimism and support we achieved a lot. An airline business has never been a one-man show. You need a board, you need management team. You have employees and shareholders of the company. All should work together to change the situation. That is what we did at LOT. And I think we can do the same in Kenya.”
Mikosz said there is enough market, fleet and educated people with KQ. “So we have all the ingredients required to make the airline successful. My job is to coordinate and make people support us. I have more than optimism. I have confidence and certainty that we are going to be successful.”
Mikosz declined to put specific date on when the airline would return to profitability or break even. “The sooner the better,” he replied.
While KQ was traversing through turbulent times it has lost many key professionals. In the past two years, senior pilots and technicians have left the airline to join Middle Eastern carriers. As part of the turnaround strategy Mbuvi’s management has sold and leased out B787 and B777s.
Operating with less aircraft and filling the shoes of the staff that have left could be a challenge for the new management. However, Mikosz said that there are adequate numbers of both aircraft and staff.
“People always change jobs. That is a managerial issue that we are going to tackle the same way we tackle any other issues. Airlines are surrounded by difficulties. That makes the job interesting. I am concerned by anything harmful to the airline but, as managers, we will manage it.”
Mikosz said any CEO can have a nice vision but the biggest challenge is to execute it. “The most important thing is execution. What matters most is what you can deliver to your customers and shareholders. It is not your vision or promise.”
The 44-year-old is married with three sons. He was born and raised in Poland and educated in France. “I have a very strong French connections,” he said.
He will soon move his family to Nairobi. “When I took office on June 1, the reception was very warm. The employees of KQ have been very good to us. Honestly I felt at home quickly.”
Mikosz has had several meetings with the KQ management and held formal and informal discussions with the employees. He said that the employees were very frank with him. “They really want to move forward. That is why I am feeling optimist that we can make it together. I am not scared at all. I do not underestimate the challenges but, for the moment, it is really nice.”
Under Mikosz’s leadership, LOT made its first profit for seven years in 2014.
Kenya Airways currently has more than $1 billion debt. Its main creditors, the Kenyan Government and 11 local commercial banks, recently agreed to change the debt to equity.