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Virgin Australia to be “hybrid” carrier under new CEO Jayne Hrdlicka
October 16th 2020
Administrators for Virgin Australia (VA) said this week the carrier's new owner, Bain Capital, was not planning to reposition the airline as an LCC after it was announced former Jetstar boss, Jayne Hrdlicka, would take over as CEO. Read More »
Hrdlicka will succeed Paul Scurrah as VA group CEO once the final steps in the sale process – the Deed Of Company Arrangements (DOCA) – were concluded, likely to be completed by month end.
Hrdlicka, who worked with Bain during the bidding process, will be VA's fourth CEO in the airline's 20-year history, following on from Scurrah (2019-2020), John Borghetti (2010-2019) and Brett Godfrey (2000-2010).
Hrdlicka said in a statement: "I appreciate Virgin Australia's unique culture and I want to protect and build on it. I am determined that Virgin Australia reinvigorates its strong brand and its passion for customer service while embracing the diversity, talent and strength of its people."
Given previous roles as a senior Qantas executive and Jetstar group CEO, Hrdlicka's appointment has raised concerns among VA staff and union groups that Bain Capital plans to reposition the airline as an LCC and take a tough line on negotiations over pay and conditions.
Hrdlicka, who recently moved from Melbourne to Brisbane, where VA is headquartered, is a board member at Hawaiian Airlines and chair of Tennis Australia. She left Qantas in 2018 to become CEO of dairy company, a2 Milk, in 2019. She spent less than a year in the role.
Deloitte's Vaughan Strawbridge, who led the VA sale process after the airline was placed in voluntary administration with debts of US$4.8 billion in April, said in a regulatory filing to the Australian Securities Exchange (ASX) he had "reaffirmed with Bain Capital that Virgin Australia will not be repositioned as a low-cost carrier".
"Virgin Australia will be a ‘hybrid’ airline, offering great value to customers by delivering a distinctive Virgin experience at competitive prices," Strawbridge said.
"This will appeal to the full spectrum of travellers, from premium corporate to more budget-focused customers.”
Scurrah’s departure before the DOCA process is completed has created doubts about Bain Capital being full and frank with stakeholders about its plans for VA given its managing director, Mike Murphy, recently said speculation Hrdlicka would take over as VA CEO as "unfounded".
“Virgin has a great management team run by Paul Scurrah and I’d like to again reaffirm we are backing Paul to successfully lead Virgin through the current turbulence and back into the skies,” Murhpy said in early September, only to reverse course weeks later.
The Transport Workers' Union (TWU) national secretary, Michael Kaine, said replacement of Scurrah put previous commitments from Bain about regional routes, international flying and the retention of 6,000 jobs and current fleet numbers in doubt.
"We sincerely hope the veil of secrecy and background shenanigans on display over the past few days is not repeated," Kaine said in a statement. "Trust must be at the heart of Bain’s dealings."
Scurrah, who was in favour of VA retaining its position as a full-service carrier that flew domestically and, when borders reopened and demand returned, internationally, said in the ASX filing he decided to resign after "some long discussions" with his family.
"Jayne has strong aviation credentials. She is very focused on seeing the business succeed and I wish Virgin Australia well under her leadership," Scurrah said.
In an interview with Orient Aviation in February, before VA entered voluntary administration, Scurrah said it was his strong belief Australia's second largest airline group would again be profitable after eight years of losses.
"We are still the most reliable airline in the country. But as I have said from day one, that makes us a great airline, it does not make us a great business," he said.
“The business side is making sure our cost base is significantly lower. We are taking more steps to make sure we have a lower cost base and a lower asset base, particularly in areas that are not making money.
“There is a lot more work underway. We are very clear on the need to make our business profitable. And we can. This is a belief I am equally as sure of today as I was when I walked in the door.”
The coronavirus pandemic and the fickle nature of private equity, means Scurrah will not get the chance to carry out that vision.
Written by Jordan Chong
