KQ ropes in Michael Joseph in turnaround strategy

Former Safaricom chief executive Michael Joseph. 

Kenya Airways Plc is working on plans to bring former Safaricom chief executive Michael Joseph into its boardroom in changes that have seen about six directors exit the airline.

The national carrier Thursday accepted the nomination of Joseph and has now asked its shareholders to vote for him alongside Treasury Principal Secretary Kamau Thugge and his Transport counterpart Wilson Nyakera.

Joseph, who has accepted nomination to the board, will replace Mr Vincent Rague, who retired by rotation. If approved, Joseph, who also sits in the board of Safaricom, Vodacom Group South Africa, Vodacom Tanzania, Vodacom Mozambique and Vodacom DRC is expected to bring his experience from the corporate sector to support its turnaround plan.

"His track record is well known," Dennis Awori, the airlines chairman told journalists at a briefing after its Annual General Meeting (AGM). Mr Thugge and Nyakera represent Government interests on the airline's board.

In the last one year, the airline has had to make painful decisions to support its return to profitability that has seen several top managers exit. Some of the directors who have left the airline or been redeployed include the finance director, human resource director, flight operations director, chief operating officer and the commercial director.

The airline said its retrenchment plan is still on, but the number of workers affected may reduce from the initial 600 that had been earlier announced.

"The first phase of the rationalisation exercise commenced on July 8, 2016 and consultations with relevant stakeholders are expected to continue in order to identify further employee cost savings," Kenya Airways group managing director Mbuvi Ngunze said.

Shareholders present at the AGM were also concerned that the airline was losing its key talent to other Middle East carriers, notably engineers and pilots. The airline told shareholders that the company, which changed its name to Kenya Airways Plc in line with the company act, had received the full Sh20 billion bridge financing to support its turnaround.

"We received Sh10 billion from the Government, being the second tranche of the Sh20 billion bridge financing that has been on-lent from the African export import Bank," he said.

The company has Sh142 billion in debt and says it is now negotiating with the lenders to obtain waivers for non-compliance with certain financial covenants as at March 31, 2016. The company also sub- eased five planes as part of its turnaround plan, dubbed operation pride, between March 2016 and now.

Ngunze said his team had put in place mechanisms to try and fight off the brain drain considering that the airline had invested heavily in their training. But he did not say the exact number of technical staff that had left.

The airline has about 600 engineers on its payroll. Mr Awori said the airline had also received the forensic report from Deloitte and it was studying it before taking action.

"The report is more than 1,000 pages and we cannot name the individuals before we have enough evidence. But we shall take the necessary action be it disciplinary or otherwise. Action has already begun," Awori said.

He declined to reveal the names of the people mentioned in the report or the key findings unearthed by the forensic auditors. It is also counting on a consultancy to restructure its balance sheet and capital restructuring.

It said that there are about four investors who are interested to buy a stake into the airline but it is still too early to give details of their names. The two main shareholders, KLM and the Government of Kenya, have also not yet determined the stake that will be put up for sale.