New KQ boss ticking one line at a time
The new chief executive of Kenya Airways is known for turning around Poland’s national carrier. He spoke to GEORGE NGIGI about his strategy for the current assignment
Exclusive Q&A with Sebastian Mikosz
Kenya Airways is renegotiating its debt with local banks. What progress have you made so far?
We are hopeful the banks will convert part of the money owed into equity. I am not at liberty to divulge much information at this point but we are at the final stages of the negotiations.
Before your arrival, KQ had started a transformation journey dubbed Project Pride. Do you intend to carry on with it?
“Project Pride” had the advantage of being systematic. I believe what has been done so far has been beneficial. I want to continue with its methodology. But for an airline, decisions take time to manifest. We are reviewing the financial status one line at a time and ticking what needs to be done. There are things that we can renegotiate in the short term, and we have started doing that, but there are also those that will take longer.
For example, we cannot pull out of an exclusive contract or out of an airport at the snap of a finger; or terminate people who have been assigned tasks till the end of year.
We are redesigning what is within KQ’S operation — there is a team for that. My job is to bring about financial results and there is a technical way of achieving that.
Part of what your predecessor did was release some of the wide body aircraft in a bid to cut costs. But considering plans to launch direct flights to the US, do you have the long-haul aircraft to handle the route?
We subleased some planes — three 777s to Turkish Airlines and two 787 to Oman Air. I don’t see us bringing back the 777s in the short term, and quite honestly also in the long term.
My decision is to stick to the 787. It is a very good plane. It gives us exactly what we need in the short term. We can fly it to Europe, Asia, big African airports and even the US when that time comes.
To control the cost of these longhaul aircraft, the more of the same type of fleet you have the better your margins. If you have different types, then you need separate crew, spare parts and different operations.
For an airline, having less than 10 aircraft of a certain type is not efficient. We have nearly 10 Dreamliners 787, so we are good at operating them. I hope in the future we will have more of these aircraft but from a wide-body perspective, we are good.
When should we expect the first direct flight to the US?
I would be cautious about commenting on the date because launching a regular flight is a complex operation. Besides the security details, there are other procedures like negotiating the slots, having contractors in New York, putting the flight in the IT system, preparing the crew and, the most important part, having commercial agreements. It is easy to fly but it is even easier to fly an empty aircraft.
You are mostly known for turning around LOT Polish Airline; how will you use the experience at KQ?
The situation at KQ is similar to LOT’S where issues are handled only in a certain way. There is a need for a shift in mindset. There is no African or other way of doing things; there is only a good way and a bad way.
I have seen companies in Asia, Europe and many other places suffer similar problems. All you have to do is make the right decisions and offer customers what they need. There is no easy way out and there will be decisions that will rub some people the wrong way.
You brought on board staff you had worked with at LOT. Why so?
First of all they are not part of the management; they are working with the management. I brought in people whom I trust to work with the team.
How much capital is locked up in African countries that do not allow free movement of foreign currency?
We have large amounts in Burundi and Angola. For the other countries, we are trying to negotiate and pull the money out. This is an issue we have tried to negotiate within the African Airlines Association as it does not affect KQ only. It is something that worries me because you have a profitable route but if you bring in the impact of the capital lock it becomes unprofitable.
KQ has been losing key talent, particularly pilots and engineers. How do you plan to address this issue?
We shall be professional about it — by focusing on training our pilots in Kenya. We presented the proposal to the board because we believe there is a huge potential of training young Kenyans. The airline has its own training centre. There are other options like bringing in foreign pilots for a while but this will not resolve the issue.
There are concerns about the cost of KQ tickets. Wouldn’t it be wise to lower the price of tickets and attract higher load factors?
I disagree that our tickets are overpriced. We must remain competitive. The whole issue revolves around balancing revenue, yield, load factor and being profitable.
My job is to strike a balance and the more revenue I have the better I am able to do so. So load factor is one of the key measurements, but we have routes with low load factors like 55 per cent that are quite profitable.
Some emerging regional airlines are threatening to eat into your market share. How do you plan to respond to them?
I am here to work on KQ in the environment given to me. However, I appeal to the government to look at the broader picture of how our competition is structured and financed.
Look at Turkish Airlines for example, where the government controls everything; the same applies to Emirates, Etihad, Qatar and Ethiopia. We are operating in an open competitive market well aware that these guys can hit us.