In Summary
  • The Polish boss may now need to wave a new magic wand to deliver his promise of flying the national carrier out of its turbulence
  • The airline has been losing its best pilots and engineers to its Middle East rivals, who came knocking with a better promise of pay.
  • Kenya Airways also argues that the ground is further made uneven by the shareholding structure of its rivals, which are 100pc state-owned.

After last week’s events, Sebastian Mikosz may now need the courage of a magician to deliver his promise at Kenya Airways. #ticker:KQ

When he was named the KQ boss in 2017, most managers at the airline started preparing for tough days ahead. But few knew just how tough it was going to get.

It was clear the national carrier needed a firm and decisive manager to fly it out of the turbulence that had seen it dice with insolvency.

In Sebastian, Kenya Airways had not just found an experienced manager, it had sourced for a chief executive officer who had built a reputation of doing the near impossible.

He was the perfect fit, to do what must be done, including taking the painful decisions such as letting some employees go if it is what was needed to keep the airline in the skies.

He was expected to start by cutting and dropping unnecessary baggage the airline had accumulated over time in wasteful expenditures.

With two dogs, the Polish flew to Nairobi to start his three-year term, well aware of the challenges he needed to surmount to pull the airline out of a painful streak of five year losses.

Sebastian had done it in the past when he was the president of LOT Polish Airlines, the flag carrier of Poland.

When he first spoke to reporters, he came out as a man determined to do it again, here in Nairobi, thousands of kilometres away from home.

And the man who speaks fluent French, English and Russian in addition to his native Polish, quietly got down to work. It would not take long before his firm hand was felt within the rank and file of the airline crew.

In addition to cumulative losses of over Sh50 billion that Kenya Airways was struggling with at the time of his arrival, regional airlines had joined forces with Middle East carriers to eat KQ’s lunch from right under its nose.

Ethiopian Airlines, which was half its size in 2010, had grown exponentially, outpacing KQ by three times.

All indications were that it was not about to stop its march to control African skies, by bringing the battle at its rival’s doorstep in Nairobi.

Lost market share

While rivals expanded, Kenya Airways was losing its market share. From 2015, the airline had shed at least four per cent of its market share.

Its fiercest rival, Ethiopian Airlines, which had the backing of its government, was growing by 20 per cent, Qatar by 12 per cent, and RwandAir by 22 per cent.

Whereas Kenya Airways was adding one destination every year to its 53 routes at the moment, Ethiopian was growing its route number at a faster pace to 131.

Turkish and Qatar airlines, which are seen as KQ’s peers, had in excess of 302 and 150 routes respectively.

Today, Ethiopian has approximately 100 aircraft in service and 49 on order. Kenya Airways has instead been reducing its fleet size to just 40 and has none on order.

“It is worth mentioning that due to current network structure, specific commercial needs and cost-efficiency analysis, Kenya Airways decided to sublease three of the 777-300ER to Turkish Airlines and one 787-8 Dreamliner to Oman Air to avoid the burden of costs of aircraft that can’t be utilised efficiently at the moment,” the airline stated.

The airline has also been losing its best pilots and engineers to its Middle East rivals, who came knocking with a better promise of pay.

Kenya Airways argues that the ground is further made uneven by the shareholding structure of its rivals.

Its main competitors, Ethiopian, RwandAir, and the three Gulf carriers have are all 100 per cent State-owned.

Govt muscle

This means that to compete them, KQ needs the kind of muscle that only governments can offer.

“All have engaged in aggressive growth strategies focused on volume and market share,” Kenya Airways says in its written submissions to Parliament’s Transport, Public Works and Housing Committee last week, in which it laid its case.

Another headache on his table was the fact that unlike his competitors, Kenya had liberalised its aviation space, making it easier for rivals to fly into the country and fly out its customers.

It does not enjoy the same privileges, it says. A weaker Kenya Airways only made work easier for Sebastian’s competitors and by the time he was fully in charge, the writing was on the wall.

Its competitors were determined to take advantage of its deteriorating financial health and find more room to further decimate it.

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