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Virgin Australia has confirmed union nemesis Jayne Hrdlicka will become the business’ new chief executive after Paul Scurrah resigned on Thursday.
However, administrators Deloitte were quick to argue Scurrah’s exit will not see the airline become a low-cost carrier, and will continue with plans to operate as a ‘hybrid’ instead.
The handover will take place in early November, when the formalities of Virgin’s sale to Bain are completed.
The news comes despite Scurrah exclusively telling the Australian Aviation Podcast just weeks ago that Bain was “a really good owner” and that the relationship between the investors and the existing management team was like “a good marriage”.
At the end of the show, which you can listen to again above, Scurrah signalled he was keen to appear on the show again to talk through how his plans were developing, suggesting his decision to apparently resign is a recent one.
Vaughan Strawbridge, who has overseen the administration process for Deloitte, said, “I know there has been speculation about the shape of the airline into the future, and I have 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. This will appeal to the full spectrum of travellers, from premium corporate through to more budget-focused customers.”
On the Australian Aviation Podcast, Scurrah said the reborn business’ new strategy will see it become a “high-quality, value airline”.
He insisted the new-look airline would emerge from the pandemic with “75 plus” aircraft and offer a network “not too dissimilar” to what it had last year. Scurrah was widely regarded as being responsible for stopping the airline’s slide into becoming like its low-cost predecessor, Virgin Blue.
Only yesterday Scurrah dismissed the rumours and added that they’ve been ongoing for quite a while.
Significantly, the announcement of Hrdlicka as the new boss is likely to infuriate the TWU, who had a high-profile falling out with the airline when rumours of her appointment swilled months ago. Hrdlicka had a notoriously fraught relationship with unions in her earlier role at the Qantas Group.
Just yesterday, the TWU suspended negotiations with the business over new working terms for its members until it received clarification that Scurrah would not be fired. However, relations were unravelling before that and the union only backed Bain’s acquisition at the last minute.
“I have also appreciated working with Bain Capital in recent months and recognise the significant contribution they have made to Virgin Australia’s long-term future,” said Scurrah in a statement to the ASX. “They have demonstrated a deep understanding of aviation and our culture.
“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 DOCAs. 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.
“I am proud of that work that has been completed to date to transition the business and remove complexity, allowing the airline to compete effectively once demand returns.
“I want to thank all of our team members who have continued to support and work tirelessly to get the company through to this stage. I will forever be proud of what we have done here. It is the people that make this airline the great place it is and I wish them all the best. I was extremely humbled by the warmth with which I was embraced on day one and for the unwavering support afforded to me throughout this ongoing major industry crisis.”
Bain Capital managing director Mike Murphy said, “Paul has provided the leadership to enable Virgin Australia to emerge from voluntary administration as a well-capitalised, best in class carrier. His personal commitment and determination to lead Virgin Australia through such a turbulent period is a credit to him.”
John Raby
says:Hard Landing by Thomas Petzinger JR. Required reading.
Dee
says:A shame Paul Scurrah is departing, a big loss for Bain: will be interesting to see the direction Jetstar Jayne takes Virgin during the next few months.
As for the Unions, they don’t own Virgin, and there is an oversupply of stood down workers; it’s a case of like it, or lump it.
AgentGerko
says:Lies, lies and more lies. VA will end up as an LCC shuttling a bunch of 737s around the trunk routes and nothing more. Bain was a poor choice, particularly as it always seemed that the administrators always gave them preference and seemed to find reasons to push other options aside. Bain has a history of taking profits without reinvesting anything, which is what destroyed Ansett. So I hope the VA fleet of 737s is sound as I suspect they will be flying for a long time, so long as VA can compete with JQ (and Rex I guess).
Jim
says:Hope Scurrah’s got a big ‘piggy bank’, as his VA Superannuation Fund balance is probably zero!
ANTON
says:WHAT HAPPENED TO PAUL SCURRAH?
Neil M Hansford
says:The writing was always on the wall and a change of CEO was as clear as day.
The only people to buy the “good news” story were the Union movement and the Labor Party who now must be trying to wipe of inches of egg off their faces.
By backing Bain against at least 2 other bidders who would have provided a better business and better employer the Unions could only see Bain.
Deloitte didn’t care who were the owners so long as they got their immoral fees at the expense of creditors and staff.
The book will be written on how not to save an airline!
Trevor
says:The various militant unions’ won’t know what hit them.
Once Bain has control on 31-10-2020, any person employed will probably be on an individual Contract, & I bet there’ll be many interesting clauses’ in it.
The unions’ will be useless, as usual, & made even more irrelevant, if that’s possible.
They won’t have ‘spare’ funds anymore to prop up their favoured political party.
That can only be a good thing.
Mike Butler
says:Bain may have “saved” Virgin from liquidation, but anyone foolish enough to think that the airline will continue in any form remotely resembling its old configuration does not know much about “private equity”! These operators are not in a business for the long haul. They are in the business (and this applies not only to Bain) for short term gain. Get in cheap; sack staff and “rationalise” i.e. “strip” assets; then get out with a profit! There are examples where this “short-termism” has been to the benefit of the target business — but not often. Might I mention Myer!
Barry Moore
says:Awful news for Virgin and their staff.
Paul B
says:Well that marriage did not last long for Mr Scurrah.
Lets see what Virgin mk2.5 will look like.
Geoff
says:Yeah…right….now why did Paul Scurrah really quit.
Kev Carroll AM
says:Virgin has many loyal clients who strongly support competition in the domestic and international market. The big RED Kangaroo has shown that when there is no competition they will exploit the market with outrageous fares – particularly on regional routes. Before the current disruption Virgin demonstrated its ability to provide an excellent standard of friendly service with staff who appeared to genuinely enjoy their work.
If the new owners can adopt and replicate the culture of Virgin Mk 1 , they will receive the patronage and loyalty of old and new Virgin clients.
AeroSexual
says:Shame. Paul is a good operator and a decent bloke to boot. Jayne takes no prisoners which clearly suits Bain’s agenda but not the longer term spirit of VA. As we saw at QF and A2 – when Jayne butts heads it usually ends in tears. I think this is a mistake and will negatively effect the VA 2.0 proposition. Going to be interesting to see how REX might tweak its plans in light of these developments. Never a dull moment!
Warwick
says:To Mike Butler……
You’re 100% correct!
Bain will be on a probable three-year plan, starting 31-10-2020.
‘Air Travel’ is the one commodity that everyone wants, but it’s THE least understood by the travelling public.
Throw in this ‘new kid on the block’ of a PE business here, soon to legally own one of the most poorly run Airline businesses’ this Country has ever seen, & ‘Joe Public’ is totally flummoxed!
The unions’ might like to quit being ‘pushy’ with Bain, as it won’t get them anywhere, especially now that Jayne Hrdlicka is CEO.
There’s still a fortnight until 31-10-2020, & if the unions’ keep going the way they’ve done for the last month, & more recently, the last few days’, Bain could just possibly shut the whole lot down.
That is always a possible option for them. Then assets would be sold off. The end.
Paul Robson
says:Sadly the only winners here, are Deloitte already who have collected their millions, and eventually Bain when they cash out!
The staff and creditors are the big losers!
Memories of Korda Mentha big pay day with the Ansett administration.
I am no fan of the TWU and it’s behaviour, but are Deloittes any better for lining their pockets from the wreck of Virgin Australia?
Mark
says:Bain in Australia best example Toys R Us . Not a pretty picture.
Travel
says:What else would we expect a “Bain” to do?
From where I sit the Scurrah Virgin Mk2 was always going to be a entity with a limited market and ultimately no place to go.
On the flip side a LCC Virgin Mk3 could be used as a springboard to enter new markets in SE Asia where the incumbent LCC’s are financially hamstrung. I’d suggest the opportunity in SE Asia is far greater than the opportunity for a middle of the market hybrid carrier in Australia.
My numbers suggest a Bain VA will make its money from downsizing staff numbers and rates of pay, reduced lease and CAPEX costs (there will probably be a CAPEX free holiday – new aircraft and spares) due to the down sizing of the fleet.
I’m not too sure how much cash Bain injected into VA, but I suspect it’s less than $1b.
If Jetstar Australia was worth north of $2b five years ago, how much will VA be worth once it is up and running again free of liabilities and unprofitable routes.
Travel
says:What else would we expect a “Bain” to do?
From where I sit the Scurrah Virgin Mk2 was always going to be a entity with a limited market and ultimately no place to go.
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Td
says:All the new owners want is a profit. After all this is what business is all about; making money and the tools(with great respect) other than hardware are the employees. They don’t care about employees like us Aussies and Kiwis do. Not part of their culture. Good thing Paul Scurrah left after the ‘pre nups failed in the good marriage ‘.
Pete
says:Sad & hurtful to read comments above that show no empathy for the lives & livelihoods of the real people affected by this situation. Fellow Australians.
If you could spare a few seconds, let’s just pause to consider the predicament of those Virgin employees without pay for over 6 months so far, and now facing a massive pay cut. People who have studied, sacrificed and contributed. People who paid taxes.
All so a bunch of foreign millionaires & billionaires can make even more money by screwing the workers pay and conditions down and reducing services to our country.
Healthy communities have a big middle class, and few at either end of the bell curve.
And while we are at it, let’s please not pile on the Q hate. Any business would react to reduced competition by increasingly prices. Especially when faced with impending doom.
A healthy Australian aviation service is about keeping a healthy V & a healthy Q.
SuspiciousMinds
says:Deloitte has a lot of questions to answer over their handling of the whole process, sounds like they were in bed with Bain the whole time!! Suspicious when Bain originally said who was going to take over the rains, then they hear the backlash that was to happen from the employees who were siding with Cyrus. Bain do an about flip and come out and say they are keeping Paul on as CEO, Cyrus drops out all of a sudden, Bain is handed the sale and they get rid of Paul. All a bit too convenient.
Gerard
says:To suspiciousminds, above……
Noticed that Bain giving Branson ONLY 5% shareholding, not the 10% he wanted.
IF VA gets flying again, Branson will still get his obscene multi-millions’ $$$ for naming rights’.
P.S. it’s ‘reins’ in your sentence, not ‘rains’!
Rocket
says:@Trevor
No, they will not be on individual contracts, EBAs are enforceable under Federal Law, it’s called the Fair Work Act 2009 (Cwth). Bain will either have to renegotiate on the fair go all round principle or just contract the work out in areas covered by the TWU and ASU. For the Pilots they can only pay the minimum under the Air Pilots Award 2010, they can’t go lower than that.
This is not the United States with individual’at will’ contracts for everybody.