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Kenya Airways board to announce Ngunze’s fate by next Friday

BUSINESS
By Moses Michira | October 27th 2016
Kenya Airways Chief Executive Mbuvi Ngunze. He  will know his fate in about 10 days following a board meeting held yesterday morning. (PHOTO: COURTESY)

Kenya Airways Chief Executive Mbuvi Ngunze will know his fate in about 10 days following a board meeting held yesterday morning.

A clear succession plan to be implemented before the end of 2016 is the most likely announcement, insiders have divulged, but an immediate exit was ruled out.

Sacking Mr Ngunze would be humiliating considering his relative success in turning around the airline, while the airline is lacking several top managers including a finance director after the dismissal of Alex Mbugua in January.

Directors of the airline agreed to put out a statement by Friday, October 5, spelling out their plans for management, where company chairman Dennis Awori decided to walk away. “We will have a statement by Friday of next week expressing the board’s thinking of the current chief executive,” a director said after the short meeting.

Mr Ngunze also sits on the board where the decisions were taken, which might explain why any specific announcement relating to his role was deferred.

Another insider corroborated the outcome of the board meeting ahead of the formal release of the company’s half-year results, which were also approved, this morning. Sub-committees of the board will also play a closer role in helping the management in turning around the airline, in the absence of substantive managers in critical top positions.

It is expected the changes would help ease the strain between the airline and its pilots – who had threatened to strike, demanding the removal of both Awori and Ngunze.

In effect, the company had conceded to the pilots’ wishes, again, after the resignation of four senior managers including Human Resources Director Alban Mwendar last April.

Former Safaricom Chief Executive Michael Joseph was formally appointed to replace Mr Awori, and is expected to be an executive chairman- albeit informally. But soon as he took over with the endorsement of the main shareholders, there were concerns about his capacity to handle a full-time job given that he is above the regulatory age limit of 70.

Transport Cabinet Secretary James Macharia spoke highly of Awori’s short tenure of less than a year, citing that under his leadership the board had granted KQ a “fighting chance” at survival.

prosecution

Macharia added the findings of the forensic audit done by Deloitte confirmed the fears of the board about the weaknesses that undermined the performance of the firm. Individuals found to have caused financial haemorrhage of KQ through corruption and outright theft will be prosecuted.

“The draft report has also highlighted possible acts of theft and corruption, which will no doubt be followed through and prosecution instituted where the evidence is strong enough to support it,” Macharia said in a statement.

Mr Ngunze said in another statement the changes implemented in the past year when Awori was chairman are already yielding results. “The initiatives put in place under Operation Pride have started to bear fruit, with a significant improvement in the financial performance of the company compared to a similar period last year,” Ngunze said.

In the financial results to be released today, KQ will report a narrower loss compared to last year’s Sh11.9 billion. Most details of the operating results are already public, after the Capital Markets Authority approved the airline’s request to a prior release as it was battling the pilots’ strike threat.

Cabin factor, a measure of utilisation of load capacity including seats, is up 71 per cent in the six months to September 30, compared to 68 per cent.

The improvement in the utility of the aircraft meant the airline moved more people, despite deploying fewer planes as several are at various stages of disposal or lease to other companies.

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