By Victor Juma
In Summary
Mr Ngunze faces the challenge of seeing through the
airline’s ambitious expansion plan while growing its profit in a
competitive market where rivals have also become more aggressive.
National carrier Kenya Airways
has gone for the safest bet in its leadership succession plan,
replacing long-serving chief executive Titus Naikuni with an insider
Mbuvi Ngunze against the backdrop of the strong headwinds the airline
has faced in the past couple of years.
The announcement yesterday by the airline’s chairman Evanson
Mwaniki marked the end of nearly a year of searching for a befitting
successor to Mr Naikuni — the CEO whose tenure more than doubled the
airline’s size and saw it open operations in more than 20 African
destinations.
“I am pleased to announce the appointment of Mr
Mbuvi Ngunze … to the role of group managing director and CEO of Kenya
Airways, with effect from December 1, 2014,” Mr Mwaniki said in a
statement.
Mr Naikuni is expected to retire in November after
11 years at the helm of the airline, having extended his term by a year
to give the board time to search for his replacement.
Yesterday’s announcement preceded this morning’s
release of the company’s financial results for the year ended March.
Investors will be keen to see how the airline performed in the period,
besides hearing the incoming CEO’s strategy for the coming period. KQ’s
share price gained 17 per cent in the past year to trade at Sh11.5.
Mr Ngunze faces the challenge of seeing through the
airline’s ambitious expansion plan while growing its profit in a
competitive market where rivals have also become more aggressive.
Kenya Airways recruited Mr Ngunze in September 2011
as chief operating officer (COO), having held a number of senior
executive positions in subsidiaries of French multinational Lafarge. He
holds a Bachelor of Commerce degree, accounting option, from the
University of Nairobi and is a Chartered Accountant (England and Wales).
KQ shareholders expect Mr Ngunze to build on Mr
Naikuni’s legacy that has seen KQ rise to become one of Africa’s most
successful airlines.
The leadership transition takes place as Kenya
Airways enters the third year of its ambitious 10-year expansion
strategy dubbed ‘Project Mawingu’, making 2014 a pivotal year.
This is the year that Kenya Airways is expecting
delivery of six new aircraft for deployment on new routes. It is also
the year that the airline hopes to calm investors’ nerves with continued
profits growth after two challenging years that saw it post a record
Sh7.8 billion loss in 2013.
Last year was not an easy one for KQ. The airline
had to contend with escalating fuel prices, increased competition, the
Eurozone crisis that led to a drop in passenger numbers in key markets
and the continuous security risk at home that has adversely affected the
tourism sector.
Those challenges saw the airline’s revenues drop by
Sh9 billion to Sh98.8 billion in the year ending March 2013. Net loss
dropped to Sh7.86 billion – the biggest loss in the history of Nairobi
Securities Exchange (NSE)-listed companies compared to Sh1.66 billion
the previous year. That performance rendered the airline unable to pay a
dividend for the first time in 14 years, putting Mr Ngunze under
scrutiny.
Cost-cutting measures as well as major gains in
fuel cost and other savings have since seen KQ bounce back to
profitability in the six months ending September.
The airline reported a profit of Sh384 million for
the period compared to a loss of Sh4.78 billion a year before. Sales in
the six months grew to Sh54.34 billion from Sh49.86 billion.
In recent months, analysts have been optimistic
that KQ has weathered the storm and is likely to announce more positive
news at the investor briefing this morning.
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