Kenya Airways CEO Shrinks Board in Bid to Return to Profit

NAIROBI (Capital Markets in Africa) – Kenya Airways Limited is thinning out its board as part of an effort to return sub-Saharan Africa’s third-biggest airline to profit, Chief Executive Officer Sebastian Mikosz said.

The carrier is implementing changes to its management structure that will “significantly” reduce the number of managers and direct reports to the CEO, Mikosz said Tuesday in an emailed response to questions. The adjustments are also aimed at making staff more accountable and some employees have opted to leave the company, he said.

“As part of making Kenya Airways profitable again it is going through a transformation,” Mikosz said. “The board has agreed on this new structure, which is more lean.”

Kenya Airways announced a $690-million reorganization last year aimed at returning the company to profit, after it recorded a 25.7 billion-shilling ($249 million) loss in 2015 — the biggest in Kenyan corporate history. Since the plan was announced, the airline cut jobs, reduced the size of its fleet and canceled unprofitable routes.

Business Daily, a Nairobi-based newspaper, reported on Monday that four executives resigned, including the heads of internal auditing and employee relations, an information systems director, and an in-flight and jet-fuel procurement director. Mikosz confirmed some staff had left, without identifying them.

“Kenya Airways held a meeting with its top managers to inform them of this new structure and what is required from each one of them as we work to ensure the airline is profitable again,” he said. “We have seen some of our colleagues opt to leave us to pursue other endeavours.”

Recent Appointment
Mikosz, a former CEO of LOT Polish Airlines, took over as head of Kenya Airways on June 1, when he replaced former CEO Mbuvi Ngunze. His appointment came a week after the airline reported its loss shrank by 61 percent to 10.2 billion shillings in the year through March.

The airline is in talks with bank about a proposed debt-conversion plan. Lenders including Equity Group Ltd., the country’s biggest bank by market value, Ecobank Transnational Inc.’s domestic unit and closely held Jamii Bora Bank Ltd., who are owed $60.6 million, have opposed the plan, the Nairobi-based Star reported on Aug. 28.

Air France-KLM’s 27 percent stake in Kenya Airways will shrink to about half that size as a result of the recapitalization plan.

Kenya Airways shares gained as much 1.1 percent and traded unchanged at 4.75 shillings by 11:35 a.m. in Nairobi. The stock has dropped 19 percent this year, underperforming the benchmark All Share Index, which has gained 21 percent in the period.

Source: Bloomberg Business News