NAIROBI, KENYA, APR 2018- Kenya’s national carrier-Kenya Airways is counting on its new Polish Chief Executive Sebastian Mikosz’s leadership to fly back to profitability after a series of losses which hit $259.4 million (Ksh26.2 billion) in 2016.
The former president and CEO of LOT Polish Airline, one of the oldest airlines in the world, was hired on May, 4, 2017, bringing onboard over 20 years of professional experience in executive management in both private and public sectors.
Mikosz had two stints as the head of Lot Airlines, including an in-depth turnaround of the company leading to its first profit in 2013 for the first time since 2008, and in barely a year, he has made remarkable developments in Kenya.
KQ, as it is known by its international code, has recorded improved performance under his stewardship, giving hope for a turnaround at the once high flying “Pride of Africa”.
The airline which had an after tax loss of $100.9 million for the year to March 2017 reported a lower loss margin of $60.3 million (after tax) for the nine months period to December, as it moved to implement a director’s decision to change the group’s year end from March 31 to December 31.
The loss has been blamed on higher operating costs occasioned by high global fuel prices and last years’ prolonged elections in Kenya which affected passenger traffic.
During the nine-month period, fuel prices continued on an upward trend closing at $62 per barrel hence increasing the group’s operating costs by nine per cent, the airline reported last month.
The political environment that reduced traffic and the high fuel costs ate into the airline’s total income which stood at $799.9 million, against a total operating cost of $787.1 million.
“The group’s revenue for the period under review were heavily impacted by the elevate political tension as a result of the prolonged electioneering period which saw reduced transit and terminating passenger through our hub JKIA,” KQ chairman Michael Joseph said.
In the nine-month period, April 1, 2017 to December 31, 2017, KQ managed to record an improved operating profit of $12.9 million. In the prior year covering 12 months, the operating profit closed at $8.9 million.
Passenger numbers stood at 3.46 million for the nine months period ended December 2017. The prior year period covering 12 months, passenger number was 4.46 million.
Cabin factor for the nine month was 76.2 per cent higher than the previous 12 months period which had a cabin factor of 72.3 per cent.
“Yield per revenue passenger kilometer declined by 6.5 per cent for the nine months period ended 31 December 2017 driven by market capacity pressure and currency fluctuations,” the airline said in its financial report.
Fleet costs for the period was $103.9 million. During the previous period covering 12 months, KQ had a fleet cost of $153.5 million.
“Although reporting an improved performance, the airline operated in a challenging environment,” Joseph noted.
Under Mikosz, the airline’s operations received a shot in the arm last November, after its shareholders agreed to convert debt into equity.
The restructuring saw the government increase its shareholding to 48.9 per cent after agreeing to convert a $237.6 million loan into equity.
A consortium of 10 local banks, through a special purpose vehicle – KQ Lenders Company 2017 Ltd, now own 38.1 per cent shares of the airline, after having their $171.3 million debts converted into equity.
According to KQ Chief executive Mikosz, the restructuring made the airline competitive, setting it on “a path of profitability with a healthy liquidity.”
Having concluded the financial restructuring, the group is now focusing on an operational turn around that will provide a stable base for long-term growth, the management has said.
This is through an optimized network that creates more connections through its Jomo Kenyatta International Airport hub in Nairobi.
Among key routes KQ is counting on is the Nairobi-New York, scheduled to commence later this year.
The airline is expecting a revenue boost of about 10 per cent from the direct flights between Kenya and the United States of America.
The developments at the Nairobi based airline have placed Mikosz on a possible second turnaround success story after LOT.
The former CEO of eSky.pl, the leading central Europe online travel agent, replaced former CEO Mbuvi Ngunze at the helm of KQ.
Mikosz has also held the position of director in Deloitte Business Consulting Warsaw office and vice-president of the Polish Information and Foreign Investment Agency, a governmental agency responsible for attracting foreign investors to Poland.
During his appointment as KQ chief, Chairman Michale Joseph said the airline had settled on Mikosz as the best candidate among the four it had shortlisted.
“We have no doubt that under his leadership and guidance, with support of management and the board, the airline will strive to greater heights and achievements as well as continue to regain its altitude as the “pride of Africa,” Joseph said.