The search for a new boss of troubled national carrier Kenya Airways #ticker:KQ has entered homestretch with the airline’s management expected to announce a new chief executive any time.
Ahead of the much-awaited announcement, experts say the person who takes over the job has a momentous task ahead in turning around the airline, which is undergoing a restructuring to lift its sagging fortunes.
Among the top priorities of an incoming boss is to look at the carrier’s balance sheet, which is currently being cleaned, and immediately turn on a charm offensive that would attract Sh60 billion that the airline needs to stay on a straight course.
The hope lies in securing money from the Treasury and French carrier KLM (Kenya Airways’ major shareholders) before turning to other possible sources.
Kenya Airways, known as KQ by its international code, is a national treasure and regaining its glory days is absolutely correlated to the well-being of the national interest.
“Kenya Airways’ problems have been long entrenched and the new CEO has to effect a trend change and probably does not have that much time,” Nairobi-based analyst and Rich Management chief executive Aly Khan Satchu told Smart Company in an interview.
Outgoing Kenya Airways chief executive Mbuvi Ngunze has stayed in office beyond the initially announced exit date to allow the airline more time to search for a new boss.
The airline’s chairman Michael Joseph recently said a selection committee charged with hiring a new CEO has shortlisted four candidates whose credentials were expected to be presented to the board on April 5, for the final pick and subsequent announcement.
The names were not revealed.
He, however, said due to their diverse nationalities it took time to have them interviewed.
Mr Ngunze, who has been at the carrier’s helm since December 2014, was expected to step down by end of March, ending his career at the national carrier which he joined as chief operating officer five years ago.
But the change of guard will now not take place until at least mid next month.
“We finished the interviewing process two weeks ago. We have shortlisted four candidates. I cannot disclose their nationalities. I will make the announcement middle of April,” Mr Joseph said last month.
“The selection process took one or two weeks longer than expected. This is because members of the nominations committee do not all live in the same country and we have to meet to discuss.”
RISE FROM THE ASHES
Analysts say an incoming chief executive should be a veteran aviation expert with proven experience in lifting the fortunes of troubled carriers.
“I would like to see a proven aviation man, someone who has experienced turn-around situations and someone who understands the nuts and the bolts of the business,” said Mr Satchu in the interview.
“I have no doubt there is a profitable business, a Phoenix that can rise from the ashes, but we need a dynamic 360 degree CEO a ‘’Lee Iacocca’’ as it were,” he said.
Mr Joseph – who joined the KQ board in October last year– had earlier noted that if the candidate they eventually pick has to give notice at their current workplace, it may take even longer for them to assume office.
Despite not disclosing the nationalities of the four candidates on the shortlist, the chairman had also said that the incoming CEO is “likely to be an expatriate” with “turnaround” experience in the sector.
“We do not also want to rush this process. It’s important that we make the right decision. The four names will be presented to the board. It’s only after that can I make the announcement,” he said.
The NSE-listed airline has in recent years come under financial pressure weighed by expensive loans and fuel hedging pacts, low tourist numbers, foreign exchange losses and the Ebola outbreak among several other negative factors.
KQ, which is 29.8 per cent owned by the Treasury and 26.7 per cent by Air France-KLM, has posted four consecutive full-year losses beginning March 2013.
In the year to March 2016, it recorded a net loss of Sh26.2 billion.
The airline was hit by industrial strikes on several occasions last year, with its pilots demanding that Mr Ngunze exits the company alleging mismanagement from him and Mr Joseph’s predecessor — Ambassador Dennis Awori.
KQ, with the assistance of US consultancy McKinsey, has been implementing a back-to-profitability plan, which had involved actions like the sale or lease of aircraft, balance sheet restructuring and staff cuts among others.
Once the balance sheet restructuring is completed, the incoming boss and the airline’s board will have to turn on the charm to attract Sh60 billion which the airline needs to stay afloat.
“The plan is to have completed the financial restructuring by the time the new CEO is coming in. We cannot expect the new person to engage in that,” Mr Joseph said in an earlier interview.
“What I hope will happen is that we shall get some cash inflow from both KLM and the Kenya government and we shall see whether that is enough to take us forward.”