Troubled Kenya Airways boss to quit before end of three-year contract

Kenya Airways #ticker:KQ chief executive Sebastian Mikosz has announced he will quit from the helm of the airline in December this year before his term expires in June next year.

The shock announcement draws his turbulent reign at the airline to a close.

Mr Mikosz told workers in a memo seen by Business Daily he would quit the airline citing unnamed “personal reasons.”

“Since I started working as CEO at KQ I have always tried to inform you about any management decisions before you learn it from the public domain. It is in line with this practice that I would like to take this first chance to inform you that I have made the decision to shorten my contract term and I have decided to resign on personal grounds effective December the 31st of this year,” said Mr Mikosz.

“It is my personal decision and I have obviously discussed it with the Board as well as with my family. I believe that this is the ideal timing to begin a transition process to find someone who will continue with the turnaround initiatives that we began 3 years ago,” he said.

Kenya Airways chairman Michael Joseph confirmed the exit in a separate memo to the airline’s workers seen by Business Daily citing “personal reasons” for the resignation.

“As you are already aware, Sebastian will be leaving us at the end of 2019. Although I am really sad to see him leave, this has been a result of long and personal discussions with myself and the Board and with his family,” said Mr Joseph.

Both Mr Mikosz and Mr Joseph did not respond to numerous calls and text messages to confirm the resignation.

Mr Mikosz said he had done his best to turn around the airline.

“Let me however be very specific that for the remaining 7 months as CEO I am fully determined to continue delivering the improvements that we have been executing together and that are showing visible results,” he said.

Adding, “I must point out that I am particularly proud of all of you as thanks to our collective efforts we’ve managed to bring the company from a historic loss in 2014 of Sh25 billion and narrowed it down to Sh7.5 billion in just four years. My clear intention is not to slow down for a single day, and we will continue this improvement trend as I am convinced that KQ is on a good path for a full recovery.”

Kenya Airways communication had not responded to our queries by the time this story was published. The national carrier, known by its international code KQ, continues to grapple with losses as cost-cutting measures put in place to boost its bottom line are yet to bear fruit.

The Sh7.55 billion net loss for the year ended December 2018 came in the backdrop of higher costs that offset a growth in revenue.

Mr Mikosz, a Polish citizen was hired in June 2017 to turn around the struggling airline that last year reported an after-tax loss of Sh7.5 billion, compared with Sh6.4 billion suffered in the previous year.

The executive, who helped turn around flag carrier LOT Polish Airlines as its CEO, on April 30 during release of KQ’s financial results said he drew encouragement from what he termed as “an improvement in the company’s underlying performance.”

“These are decent results. They are not an explosion of success,” he said.

“The overall situation is improving. The investments are paying. And the losses are trimming.”

Mr Mikosz, whose terms was to end in June next year, said then he is betting on fleet expansion, adding new routes and collaboration with African airlines that are seen to pose a threat to KQ’s regional market share for a better outlook in 2019.

The 2018 results marked the sixth year in a row in which the Nairobi Securities Exchange-listed airline remained in the red.

2018 was also the fifth consecutive year that KQ shareholders missed dividend payouts.

The carrier last declared a dividend of Sh0.25 per share for the year ended March 2012, when it made a Sh1.6 billion net profit.

KQ’s revenue in 2018 hit Sh114.18 billion, largely driven by passenger bookings.

Its revenue in the previous nine-month period stood at Sh80.7 billion.

The airline’s total operating costs stood at Sh114.87 billion in the period under review.

“Fuel, personnel and the cost of aircraft remain the top three drivers of airline costs contributing to about two thirds of total operating costs for the airline,” said KQ, which last year resumed a controversial fuel hedging policy.

Mr Joseph said then the carrier is still betting on clinching a controversial deal to run the Jomo Kenyatta International Airport (JKIA) in Nairobi to boost its fortunes, but added that KQ would still survive if the deal fell through.

Parliament’s Transport and Housing committee has since rejected the controversial proposal.

Mr Mikosz had maintained that being allowed to manage JKIA would help the airline to remain relevant in the market at a time when carriers are witnessing increased competition.