Feedback first priority says new Virgin Australia CEO

Paul Scurrah, the Asia-Pacific’s newest airline CEO, is well aware that taking Virgin Australia to its next phase of development will be challenging, chief correspondent, Tom Ballantyne, reports.

March 1st 2019

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As transport industry veteran, Paul Scurrah, prepared to take charge of Virgin Australia (VA) this month there was some good news to report to the carrier’s international investors. Read More »

After six years of statutory losses that added up to US$1.1 billion, the six months ended December 31 returned a net profit of $38.3 million, up from a $7.1 million loss a year earlier.

Retiring CEO, John Borghetti, has lead VA for the last nine years in a long and costly transformation from low-cost carrier, Virgin Blue, to its present full-service model. He will step down on March 25.

But recent times at VA have not been all good news. While the group has reported overall profitability, losses at the carrier’s long-haul international operations have blown out to $17.7 million, up from a $1.9 million deficit in the same six months a year ago. Major contributors to the result was the loss of a partnership with former shareholder, Air New Zealand, on Trans-Tasman routes and stiff competition on services between Australia and Hong Kong.

These loss-making routes could cost the carrier more if Qantas Airways wins approval from Australian competition authorities to code-share with Cathay Pacific Airways on the Australia-Hong Kong route that the two airlines already dominate.

Although critical to the carrier’s future, the pending application is only one of the issues confronting the 50-year-old Scurrah, whose most recent position was CEO of stevedores, DP World Australia. He has never run an airline but he worked for Australian Airlines, the Government-owned domestic carrier that was merged with Qantas as well as privately owned Ansett Airlines.

In the last 17 years he has been a senior executive of travel agency, Flight Centre, Queensland Rail and Aurizon and was one of the founding directors of Australian regional airline, Regional Express (Rex).

“I’ve had a 28-year career in moving people and things around. In the time I’ve had outside aviation I’ve had a very frequent ticket on Virgin, so I’ve kept a close eye on what they’re doing,” he told local media following the announcement of his appointment.

He said his priority at VA would be to provide a service customers want in a good environment for staff while ensuring “shareholders actually get a return that they’re happy with”. That will be critical.

VA has a unique set of shareholders - Singapore Airlines, Etihad Airways, Chinese groups HNA and Nanshan, and Sir Richard Branson’s Virgin Group. So far, they have seen very modest returns on their investments in the VA group.

Scurrah, however, said: “I clearly come into the role with some ideas about what I would like to do. What I really intend to do in the early days is get around and spend as much time as I can with the team and blend ideas with feedback I want to get from inside the business, before plotting the path forward.”

As he prepares to go one to one with Qantas, Scurrah revealed that one of his family’s heroes - his mother Bev worked at Qantas’ domestic and international call centres for 25 years - was the late Qantas CEO, James Strong.

“I learnt so much from James in my formative years. He was someone who was admired by everyone for the humility he showed as he went about his role, his intellect and the way he galvanized people to work in the same direction.” He wants to emulate Strong’s model at VA.

It took the VA board more than seven months to decide Scurrah would be its new CEO. “His appointment is testament to his strong leadership credentials, which include more than 20 years’ experience in transport, logistics, travel and aviation,” said VA chairman, Elizabeth Bryan, in a statement.

“The board received enormous interest in the role both locally and internationally. Paul’s highly relevant transport and logistics expertise and strong commercial background make him the ideal candidate to consolidate the Group’s achievements and continue to build momentum into the future.”

Bryan continued: “John [Borghetti] has made a significant mark on the aviation industry as a whole and Australian travellers have benefited because of his commitment and dedication to improving airline travel. The board and I are grateful for his leadership and transformation of the airline into the diversified group that it is today.”

Scurrah said VA is halfway through it latest three-year transformation program which has resulted in the disposal of the Embraer E190 regional jets and some ATR turboprops, the transition of its budget subsidiary, Tigerair Australia, from an A320 to a B737-800 operator and capital raising efforts to boost the balance sheet.