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Axing JobKeeper would be ‘devastating’ for Virgin, says Hrdlicka

written by Adam Thorn | February 2, 2021
New Virgin CEO Jayne Hrdlicka on her first day at the airline
New Virgin CEO Jayne Hrdlicka on her first day at the airline (Virgin)

Virgin Australia chief executive Jayne Hrdlicka has told a senate committee that ending JobKeeper for the aviation industry in March would be “devastating”.

In the most significant intervention yet from a senior industry figure, Hrdlicka added it might be “impossible” for the business to “bear the financial cost” of operating in a market where borders are opening and closing without warning.

“We cannot predict when it will end,” said Hrdlicka. “We don’t know whether we have two more years to go. We don’t know whether we have two weeks.”

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JobKeeper payments are set to end nationwide at the end of March, and Prime Minister Scott Morrison has remained tight-lipped as to whether it would continue for some affected industries.

Hrdlicka was speaking to the rural and regional affairs and transport references committee investigating the ‘Future of Australia’s aviation sector, post COVID-19’ on Friday. Her comments were recently released via a transcript.

“We’re still working through exactly what we will need to do [if JobKeeper is not extended] but, you can imagine, it will be devastating,” Hrdlicka said.

“We’ve got 3,000 highly skilled workers who are currently stood down and, as borders open, we bring them back in and they get hours, and they’re very happy to be back at work; then, when the borders shut, we have to stand them back down.

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“The JobKeeper program, that wage support, enables them to stay whole and not be economically unstable as individuals or families in the process.

“The implications of losing those skilled workers are pretty significant. When the announcement was made, for example, yesterday that Queensland would open with New South Wales, we’d already got people rostered on, in the hope that the borders would open, and, then, we have to cancel flights back when the borders stay closed.

“So we’ve got people ready to go. We will be flying more flights between Queensland and New South Wales, pretty much, overnight, starting Monday and we’re in a position where we can support the economy.

“If we did not have those people stood down and ready to go, it would take us weeks to get people identified to come back in, figure out who’s working and who’s not working and get them back in. They would all have to be retrained, in order to meet our regulatory requirements, and the volume of people that we would require, to be able to do that, means it’s months to get stood back up and to get the capacity to support the demand.

“We’re quite conscious of how important it is for us to have that resilience and support and stability. Financially, to do that ourselves, it would be a devastating thing, because we cannot predict when it will end. We don’t know whether we have two more years to go. We don’t know whether we have two weeks. So it’s an impossible thing, to bear the financial cost of that resilience and flexibility to support the economy.”

Hrdlicka’s plea was made shortly after an industry open letter was sent to the Prime Minister urging an ‘Aviation Keeper’ payment.

It was signed by the businesses Virgin Australia, Menzies, dnata, Gate Gourmet and Swissport and the unions the TWU, ETU, AMWU, ALAEA, FAAA, AWU, VIPA and AFAP.

The JobKeeper package was introduced to provide coronavirus-effected business with an initial $1,500 per employee, per fortnight.

Companies are then legally obliged to pass that payment onto workers in a bid to keep the economy active during the pandemic.

However, the scheme has proved problematic for much of the aviation industry.

Many airport workers, such as those at Newcastle, are locked out of the financial package because their firms are council-owned; while staff at dnata were similarly told they were no longer eligible because their company is owned by a foreign government.

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5 Comments

  • Nicholas

    says:

    She seems confused, the PM is gritting his teeth so much they’re worn right down at the moment.

    He wasn’t the Premier in a fit of sheer madness locked WA down for 5 days for 1 case with 5 minutes notice and which hasn’t increased yet.

    Ditto the QLD Premier who has made us all dizzy with the number with the sheer number of times she’s done a WA!

    So she is right in that the Aviation sector is on its knees but keeping pumping free money into the sector on the basis that things will get better isn’t the answer.

    Interesting that our rich and professional Private Equity funds seemed to have neglected to conduct any sound risk analysis by her pleading…..

  • Trevor

    says:

    Virgin wouldn’t have been in such a bad predicament as they eventually got, if their former CEO hadn’t wanted to create a ‘replica’ of QANTAS.
    It’s now owned by a multi-billion $ asseted company in Bain, so why aren’t they pouring the funds required into it?
    Somethings not quite right there, & hasn’t been since last June, when Bain was ‘last man standing’ in Administration proceedings.
    About time its’ owner stepped up to the mark & made it into a profitable Company.
    Or is that not what they want to do, being private equity???

  • Ben

    says:

    I understand the plight, but devil’s advocate; How long does the federal government subsidise a position that is ostensibly redundant? At what point do we expect these companies to identify their new reality and adjust their staffing to suit?

    To be clear, I’d love for the airlines to spin up to 100% tomorrow, but realistically we ALL know that’s not going to happen. It’s going to be at least another year or longer. How long do we expect the government to pay for ‘reserve’ airline capacity?

    The realist would suggest that for starters the QF 4 engine fleet is gone forever, the VA international operation is gone, those pilots need to be re-distrubuted amongst the remaining fleets or retire or be made redundant (Not pleasant, but realistically its going to happen). International is going to be operating at a tiny fraction for years yet until the virus finally starts to subside post vaccines etc. But we probably have a few more waves yet when various nations make poor decisions based on economics rather than health data, like Europe did last summer when they basically sold themselves up the river to have a summer vacation. Realistically it will be 2023-25 before we get a high percentage of 2019 traffic again. So again how long do we expect the government to prop up non-flying crew (who are not going to be remotely current at some point) in the hope that the recovery is “coming soon”.

  • Hi Ben;

    A slight bit of information for you. You are correct that Virgin currently no longer has an International business operation, but in fact their 5 Boeing 777-300 are in fact still in Australia and stored at Wellcamp Airport near Toowomba in Queensland. Virgin have their 4 Virgin (now Bain owned Boeing 777-300) aircraft their VPD, VPE, VPF and VPH. In addition Bain has one lease Boeing 777-300 VOZ there as well. I suspect the leased aircraft is there till its lease runs out. The aircraft have been at Wellcomp since Oend October and in VPF’s case November 27th. Virgin have said they are planing on restarting an I trnatuonal operation once the borders re-open for International flights. Presumably they will use the 4 owned aircraft.

  • Frequent Traveller

    says:

    Where is you ASIC Jayne?

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