Michael Joseph: How I plan to fly Kenya Airways out of turbulence

Former Safaricom boss Michael Joseph’s first assignment at Kenya Airways has surprisingly been to explain his role.

Touted as the man with the ‘Midas touch’, he is already quickly gelling into the Kenya Airways brand even earning the national carrier’s shares a ‘Micheal Joseph’ dividend that has boosted prices at the Nairobi Securities Exchange.

Kenya Airways stock continued on its upward trend after closing last week at 6.85 per share, which is 3.8 per cent higher compared to the previous week. Up 39.8 per cent year-to-date, the local airline is the best performing counter in 2016.

But while at Safaricom, where he was the Chief Executive Officer, the mantelpiece that embodied the organisation itself, his new role requires him to be in the backroom of decision making.

“Many people are already confusing me with the CEO who is Mbuvi Ngunze. I have already received questions about operations, someone asking about luggage missing, things like that, thank goodness I can say, I am the chairman not CEO,” he said at his first press briefing on Friday.

On a serious note though, the rubber meets the road in three weeks when he will chair his second board meeting that will look into a very thorny issue that threatened to throw KQ’s turnaround strategy into another tailspin, the Deloitte audit report.

“I have read the Deloitte report, there are a lot of papers to read...we are going to go through it. We have asked the audit committee to have another look at it, then we need to get the response from management to some of the things in that forensic report,” Joseph told Business Beat.

“We will review this in our next board meeting on November 24, and we will take whatever action we will need to take at that time.”

ACTION TAKEN

Deloitte found out that the airline was bleeding from ticketing fraud with the top 10 travel agents accounting for Sh3 billion of the losses. Some agents were inflating prices for tickets sold to corporate entities, creating the general consensus in the market that KQ is an expensive airline.

The company’s staff also had a hand in the jar where those with access to the Amadeus, the airline’s reservations system, would re-open closed fares and enable over-booking of tickets in lower fares. They would also change, cancel, refund and reissue tickets. Siphoning revenues from cargo was choreographed in at least 16 KQ stations across the globe, attributable to possible collusion, fraud, corruption and negligence by the airline’s management.

Joseph said he has experience with audit reports while working at Safaricom and that auditors tend to write down what everybody tells them and then after that they sort of verify all the facts. He said those found culpable will be dealt with and that in fact, some action had already been taken.

The Deloitte report spurred a crisis after pilots demanded action against the airline’s top management issuing a strike notice in October 18, which has since been withdrawn.

“It’s a bit disappointing, you probably know this from the Safaricom days that we did some forensic audit on some things and unfortunately the draft report was leaked to the media as well. I think this is very similar here, some of the facts are real and some are not so I think we will be going through the process,” he said.

“We are determined to make sure that whatever is in there which is factual we fix it, we take care of the people that have done whatever they have and make sure it doesn’t happen again.”

Joseph said that the biggest concern for him going forward is that KQ plugs the holes that they have identified in the forensic report and make sure their systems are better.

Joseph, 70, said he is upbeat on rebuilding KQ’s brand by looking at all elements including pricing, performance on time, ground and on air service. The new board chair said his greatest task would be motivating staff, strengthen management and continue with ‘operation pride’, which is the airline’s turnaround strategy.

My legacy

He hinted at getting a substantive Chief Finance Officer and Human Resource Director from within the airline, two positions he says are crucial for the airline in its bid to turn a corner. Joseph wants his success at Kenya Airways, which he admits will be momentous challenge, to be part of his legacy.

“I took Safaricom from a small non-existent company to be the biggest most profitable company in East Africa before I stepped down as CEO in 2010 and continued to manage M-Pesa on a global level,” he remembers. “So, I have a legacy in Kenya which I want to preserve and that is being successful and this is just another step in the way to be successful.”

Joseph said the airline industry is complicated and there will be challenging moments when ‘he will be wondering whether they are doing the right thing or not’. “KQ has suffered over the last few years for various reasons which are a combination of bad luck, misjudgments and some management decisions,” he said.

He is, however, confident that with the backing of shareholders, management, staff, suppliers and financiers, the airline is poised for take-off.