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

The East African - - FRONT PAGE -

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.

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