Virgin Australia CEO Paul Scurrah has stepped down from leading the embattled airline, with former Jetstar boss Jayne Hrdlicka expected to step into his role.
His departure was confirmed in a statement to the ASX on Thursday morning, amid reports of conflict between Scurrah and the airline’s new owner, Bain Capital.
Scurrah is expected to leave once the sale to Bain Capital is completely finalised in early November.
“Paul has done an outstanding job supporting us through this process,” said Deloitte administrator Vaughan Strawbridge.
“It is a testament to his leadership that we have been able to complete this sale and the business is well positioned to play its vital role in the rebuilding of the Australian aviation industry and economy more broadly.”
Continuing, he said he knows there have been questions around whether Virgin will be reshaped into a low-cost carrier.
Strawbridge said Bain Capital will not change the airline in this way, but will instead turn it into a “hybrid” airline that will appeal to both budget-conscious and premium corporate passengers.
According to reports, Scurrah and Bain knocked heads over the distinction, with Scurrah wanting to keep Virgin as a full-service carrier.
Virgin Australia entered voluntary administration earlier this year as the Covid-19 pandemic crippled domestic and international travel, with Scurrah saying he is proud of his work in 2020.
“The time feels right, and I know the business will be in good hands.”
The Transport Workers Union suspended negotiations on Wednesday amid rumours of Scurrah’s imminent departure.
“This is a serious and worrying development. The ink is not yet dry on the sale of Virgin and it appears that private equity firm Bain Equity are behaving as we feared: ripping out the heart of Virgin and reneging on promises to the Australian people,” Transport Workers Union national secretary Michael Kaine said on Wednesday.
“We are suspending negotiations on enterprise agreements while we seek clarification on these developments. For our part, we are engaged in talks in good faith. If the plan and scope of the airline as outlined in August by Bain Capital has already been scrapped then this is a serious betrayal that must be addressed,” he said.
Who is Jayne Hrdlicka and what does she mean for Virgin?
Scurrah said Bain intends to appoint Hrdlicka as CEO once the transaction is complete.
“Jayne has strong aviation credentials,” Scurrah said.
“She is very focused on seeing the business succeed and I wish Virgin Australia well under her leadership.”
Bain Capital said Virgin Australia needs Hrdlicka’s “different form of leadership”.
“The challenges facing all airlines are extraordinary, and Virgin Australia requires a different form of leadership to survive in the long term. Given the environment, we need a hands on CEO with deep aviation, commercial, operational and transformation experience,” Bain Capital managing director Mike Murphy said.
“Jayne is the right person to take the business forward under Bain Capital’s ownership. She has extensive airline experience and I know she, alongside Bain Capital, wants nothing more than to see Virgin Australia prosper and thrive well into the future.”
American-born Hrdlicka previously led a2 Milk and Jetstar and has also occupied senior positions at Bain, Ernst & Young, Qantas and Tennis Australia.
While leading Jetstar, she developed it into the popular budget airline it is today, and in her last year delivered a $327 million profit. At the time, that was larger than Qantas’ international arm.
However, federal secretary of the Australian Licensed Engineers Association, Steve Purvinas in June said he hoped Bain wouldn’t win its Virgin bid due to Hrdlicka’s history at Qantas and Jetstar.
“She can be a hard negotiator when it comes to dealing with unions,” he told The Australian.
“We were strongly against her as being chief executive of Virgin because of her background with Qantas and her minimal experience in running an airline.”
Hrdlicka was head of strategy when Qantas CEO Alan Joyce in 2011 locked out its workforce amid a union strike over pay. Qantas had planned to sack 1,000 staff, in what the Australian Council of Trade Unions dubbed the “darkest day” in Australia’s flying history.
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