Mikosz: Turnaround captain whose plan failed to take off

When Sebastian Mikosz (pictured) was hired to run national carrier Kenya Airways (KQ) two years ago, he brought with him to Nairobi his family and even pets, an indication that he would be here for the long haul.

It is thus a surprise that the man has cut short his stay at the airline, opting to terminate his three-year contract with KQ after only serving two years.

He has started serving a six-month notice required by his contract and is expected to leave by December. Had he chosen to stay - at the discretion of the board of directors - Mr Mikosz could have held the chief executive seat for a total of six years.

He had continued to build on the momentum that former chief executive Mbuvi Ngunze had started that resulted in cutting the carrier’s losses to Sh7.5 billion last year.

“I must point out that I am particularly proud of all of you as thanks to our collective efforts, we have managed to bring the company from the historic loss in 2014 of Sh24 billion and narrowed it down to Sh7.5 billion in just four years,” Mikosz told KQ staff in a memo on Friday when he announced his departure.

While he may have overseen the narrowing of losses in the two years, he is yet to bring to the table a formula to get the airline out of its troubles and agreeable with everyone.

This is despite having been paid over Sh109 million cumulativety up to December last year and, assuming that the carrier will retain the current pay rate of about Sh5 million a month, he will have made another Sh62 million this year.

Mikosz appeared to have banked greatly on the takeover of Jomo Kenyatta International Airport (JKIA), a plan that has been heavily criticised to the extent that Government and Parliament have talked of asking KQ to consider other options.

Hand over

The proposal is for Kenya Airports Authority (KAA) to hand over the airport to KQ and receive an annual fee over a 30-year period.

Mikosz still thinks this is the best way out for the airline and notes that despite opposition from key stakeholders including KAA, the Government owns both the airline and the airport’s operator and they would be required to implement whatever plan Government comes up.

He also noted that both the executive and legislative arms of Government are alive to the fact that both JKIA and KQ cannot continue operating in the current manner.

“You will never have unanimity. People don’t like change and this process would entail massive change,” the CEO said in an interview last week.

“But I look at it from a point of view whereby both assets are public entities, it’s not a debate by KQ and KAA. So if the Government and Parliament decide, people may like it or not but they will be bound to implement it.”

The airline and its hub have lost substantially to competition, in particular Ethiopian Airlines whose model KQ has tried to get stakeholders to buy into and allow it to have a degree of say in running the airport.

“Parliament’s Transport Committee knows that the status quo cannot last. From my understanding following interactions with the MPs, the committee is unlikely to call us and say ‘go back to your companies and continue doing what you have been doing’,” said Mikosz.

“The committee is agreeable that KQ and KAA are facing a pretty serious risk of continuously losing market share, which was our thesis as KQ management from the beginning. It is not about our dividends but market share for the Nairobi hub.”

Mikosz has been at the centre of not just this debate but has also been a subject of scrutiny. In its annual report published this month, KQ reported that it paid Mikosz over Sh62 million last year or about Sh5.2 million monthly, which many felt was unfair for a struggling firm making in excess of Sh7 billion losses to pay an expatriate.

However being at the centre of the controversies, particularly the debate on whether KQ should operate JKIA, has helped deepen understanding of civil aviation in the country, he says.

“Civil aviation is at the attention of everyone today and the general public has understood that it is not about just the financial health of KQ but about Kenya’s position in the African aviation market in which we are already losing market share,” said the CEO.

“If this should be my legacy, I would be happy. I have played part in getting people to start seeing not just this as being about KQ but about creation of jobs and transforming Nairobi into a bigger hub.”

During his time, among the things that he achieved was the direct flights to the US, which though he now says are not lucrative, have eluded the airline for years.

Restructuring

Mikosz joined the carrier at the tail end of a complex restructuring and oversaw its completion, in what was perhaps the first major victory that he scored, with the new structure having been deemed as key in guaranteeing the future of the airline.

In this radical surgery, banks were forced against their will to become shareholders while hapless holders of ordinary stock were diluted at a ratio of 20 to one that was bulldozed by majority shareholders at an Extraordinary General Meeting in 2017.

Mikosz has also showed tact in the taming of KQ employees’ troublesome labour unions that have in the past sent senior officials packing by simply downing their tools.

The exits of former finance boss Alex Mbugua, Ngunze, and chairman Dennis Awori were all framed by the powerful flying unions.

The Kenya Airline Pilots’ Association and the Kenya Aviation Workers Union have also grounded the airline’s operations, in disruptive and costly ways through go slows and strikes.

The carrier’s board and management have previously been at a loss as to how to handle the unions.

However, since Mikosz - together with board chairman Michael Joseph- joined the airline, the industrial actions have been few and far between.

In the few instances where they occur, the management has been able to nip them in the bud and when they go on to full blow strikes, they have not been as damaging as they have been in the years before.