Former KQ finance director Alex Mbugua. FILE PHOTO | SALATON NJAU | NMG
When former Kenya Airways finance director
Alex Wainaina Mbugua drove his silver Prado into the airline’s Embakasi
headquarters at 8:30am last Wednesday, he certainly knew he was as
unwelcome as a priest is in a raunchy nightclub.
If the
53-year-old teetotaler had any doubts of this, the airline’s security
guards wasted no time appraising him; he was blocked from accessing his
office as ordered by the court the previous day.
Instead
of keys to his office, from which he was in similar dramatic fashion
ejected on January 19, 2016, Mbugua was handed a letter bearing
instructions that he immediately proceed on leave for 21 days.
Mr
Mbugua was drawing his unflappable confidence from a ruling by
Employment and Labour Relations Judge Monica Mbaru who, after court
proceedings spanning 20 months, concluded that KQ unlawfully sacked its
finance director of eight years.
The
judge ordered the national carrier to either reinstate him immediately,
and pay him his backdated dues in 30 days, or wire the equivalent of 48
months basic pay to his bank account.
The first option
would cost the broke airline about Sh66 million, based on Mr Mbugua’s
gross monthly salary of Sh3 million. The alternative racks up to a
whopping bill of Sh144 million.
“I was taken aback by
the move to send me on leave. I was told that the CEO, who was to
receive me according to the court order, was not in the country. The
person holding brief for him was also said to be unavailable,” said Mr
Mbugua.
“I was basically told to go on leave as the
airline reviews the judgment and their next course of action. My
understanding is that this (forced leave) directive is contrary to the
court’s orders. However, my lawyers are reviewing it.”
In
sacking Mr Mbugua, KQ accused him of intentionally skipping an urgent
performance review meeting, which was seen as insubordination.
The
airline also claimed he was an underperformer, an accusation Mr
Mbugua’s lawyers pushed back on in court, arguing that he had received
several accolades for his job.
Mr
Mbugua’s sharp critics in the public sphere, some of whom interact with
this writer on his social media pages, hold a similar no-love-lost view
as KQ; he is one of managers responsible for plunging the airline into a
financial rut.
Many of those who accuse him of
miscarriage of duty will ordinarily and quickly point out two things –
the aborted Project Mawingu and the costly fuel hedging programme.
Project
Mawingu, the ambitious expansionary plan was supposed to grow KQ’s
destinations from the then 57 in 2011 to 115 in a decade. This was to be
supported by a beefing up of its fleet from 34 to 119.
Mr
Mbugua, who joined KQ in July 2008, chaired the strategic planning
committee that developed the project, and presided over the capital
raising for the plan which needed a whopping $3.65 billion in the first
five years.
The debt-financed fleet modernisation saddled the airline with huge and expensive liabilities, mostly from commercial banks.
Project
Mawingu spectacularly imploded, leaving the airline with excess
capacity and auto-regenerating excuses from the managers who worked on
the project, many of whom have since exited.
Huge fuel
hedging and forex losses, a runaway wage bill, terrorism attacks and
increased competition from other carriers are all said to have colluded
to swat the project off course.
Expectedly, Mr Mbugua, who says he has recently rededicated his life to God, has his own set of explanations.
“When
I joined KQ, 13 aircraft purchase orders had been made. Nine were firm
and four optional. Surprisingly, we did not have a network plan for the
inbound aircraft. I was tasked with helping develop one,” he told Business Daily onThursday.
“Now,
the plan was not bad. However, the commercial team failed us because
they were unable to find passengers for the planes. Occurrences like
Ebola in West Africa affected everybody so that should not be used as an
excuse.”
Another indictment that Mr Mbugua
just cannot seem to shake off, but not for want of trying, is the impact
that fuel hedging had on KQ’s finances.
Several
times a year, he would get on a podium and explain why it was prudent
for the airline to continue using this contractual tool to protect
itself from the price volatility of fuel price, KQ’s single largest
expense.
KQ reported a Sh26.2 billion net loss
for the year ended March 2016 (three months after Mr Mbugua’s exit)
compared to Sh25.7 billion after-tax loss it posted the previous year.
This
record-breaking corporate Kenya loss was mainly the result of a Sh5.1
billion loss KQ booked from fuel hedging. Soon thereafter, former chief
executive Mbuvi Ngunze said: “My position is that we have put on hold
new hedging contracts.”
Despite being KQ’s
chief finance advisor through tumultuous fuel hedging periods, Mr Mbugua
maintains that it was the right decision for the airline.
“Hedging
is a risk management tool that all responsible airlines make use of,”
the avid golfer explained. “When we made losses, big airlines like KLM
and Air France suffered too. I still believe hedging was the safer
alternative.”
The son of Reverend Judy Mbugua of Ladies Home Care Fellowship holds two Masters of Business Administration (MBA) degrees.
One
of them is on international finance from Wits Business School in South
Africa acquired in 2001 and another on general finance from New York
University four years ago.
Prior to joining KQ
in July 2008, he was CFO at Johannesburg-based Africa Open Pit Mines
AngloGold Ashanti, a global gold producer operating in 11 countries and
listed on five bourses, including the New York Stock Exchange.
But what does the father of four really want from the ailing national carrier? His job back? The hefty pay off?
“This
matter has been extremely straining on my family, my being and on my
finances. I do not want a long drawn battle with KQ in court. I simply
want closure one way or another,” he told said.
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