Virgin Australia CEO resigns

A day of turmoil as unions question Bain Capital’s plans for airline and carrier said to cut services below that of a low-cost carrier

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Use this oneThe administrators for Australian carrier Virgin Australia Group today (15 October) announced that CEO Paul Scurrah will step down when the airline’s sale to Bain Capital closes in November and will be replaced by former Jetstar boss Jayne Hrdlicka. The news came as unions representing various Virgin Australia employees questioned Bain’s plans for the airline once it gains complete control.

Outgoing Virgin Australia CEO Paul Scurrah.

Administrators were quick to respond and said in the statement announcing Scurrah’s departure that while “there has been speculation about the shape of the airline into the future…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. This will appeal to the full spectrum of travellers, from premium corporate through to more budget-focused customers”.

Scurrah said “over the last 18 months, I have had the great privilege of being the CEO and managing director of the Virgin Australia Group. While it has been the most challenging time in aviation history, I have continued to be so proud of the way my team and our entire organisation has fought to save this airline and to keep competition alive and well in Australia. We have succeeded in not just ensuring the future of the company, but also reset the business to ensure it is well placed to deliver for Bain Capital for many years to come. Having seen the company through COVID-19, voluntary administration, the sale to Bain Capital and the redesign of the business, I will be stepping down as CEO and managing director at financial close of the (sale). I have made this decision after some long discussions with my family. The time feels right, and I know the business will be in good hands.”

Scurrah said his successor Hrdlicka has “strong aviation credentials. She is very focused on seeing the business succeed and I wish Virgin Australia well under her leadership”.

Media reports in Australia are saying other Virgin Australia executives will be following Scurrah through the exits. Virgin Australia filed for the equivalent of Chapter 11 bankruptcy in April.

Meanwhile, unions have suspended talks over various agreements with Bain and previously the Transport Workers Union (TWU) has clashed with Hrdlicka who is said to be a key figure at Bain. The TWU has written to Bain seeking an urgent meeting to discuss Mr Scurrah’s future and whether it would uphold its pre-sale promise to keep 6000 workers, tiered cabin classes, airport lounges for business class travellers and the airline’s international network.

TWU National Secretary Michael Kaine said the reports of Scurrah’s exit were a “serious and worrying development. We are suspending negotiations on enterprise agreements while we seek clarification on these developments,” he said. “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.

Warren Staples, a senior lecturer in the School of Management at RMIT University, said “Virgin Australia boss Paul Scurrah has been an influential public face and generated significant goodwill in the transition to new owners Bain Capital. The replacement of Paul Scurrah by ex-Jetstar CEO Jayne Hrdlicka signals that Bain are looking to slash costs, improve the balance sheet, and exit via listing or making a quick sale – a classic pump and dump strategy. If Virgin do head down the lowest cost path then it’s hard to see this price war with Jetstar ending successfully for them. It feels like the worst of Australian aviation history repeating. In a worrying sign that corporate Australia is perhaps too forgiving, Richard Branson has returned as a 5 percent shareholder while paying for none of the cost of the previous iteration of Virgin’s failure.”

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