- Virgin Australia CEO Paul Scurrah has left the airline just weeks after receiving the blessing of new owner Bain Capital.
- He will be replaced by former Jetstar boss Jayne Hrdlicka.
- It comes after much speculation following a falling out between Scurrah and Bain over Virgin’s new direction.
- Visit Business Insider Australia’s homepage for more stories.
Virgin Australia’s CEO has resigned, confirming one of the worst kept secrets in corporate Australia.
In a statement issued to the ASX on Thursday, Virgin Australia’s administrators finally revealed that Paul Scurrah was indeed resigning from the airline he piloted for just 18 months, and would be replaced by the former boss of Jetstar.
“It is the intention that Jayne Hrdlicka will be appointed by Bain Capital as CEO once the transaction is complete, in early November,” Mr Scurrah said in the statement.
It comes a little over a month since Bain Capital was approved as Virgin’s newest owner, after a months-long administration.
The private equity firm repeatedly gave Scurrah its blessing, promising all and sundry he would stay on as CEO as it competed with a number of other serious bidders.
“Paul and his team have done a great job navigating through a difficult situation. We are
backing their plan and will invest to make it even better,” Bain’s Barnaby Lyons said at the time.
That understanding was clearly not long for this world as Scurrah and Bain knocked heads over the future direction of the airline.
Bain and Scurrah reportedly clashed over exactly how much of a budget airline Virgin 2.0 should be, the size of Virgin’s fleet, and other strategic points.
Deloitte administrators tried to douse those concerns on Thursday.
“I know there has been speculation over 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,” head administrator Vaughan Strawbridge said.
As Business Insider Australia reported, speculation had been rife of the growing divide between the two parties with Hrdlicka the favourite to succeed him.
It’s a move that has already brought forth ire from the unions, which fear a management shakeup and a strategy change could spell more job losses. The Transport Workers Union (TWU) has clashed with Hrdlicka before during her time at Jetstar where she developed a reputation for her hard-bargaining style.
“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,” Warren Staples, a senior lecturer at RMIT University’s school of management, said.
“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.”
It’s expected that a management shakeup could seek other executives depart as well.
The TWU has already penned a letter to the Prime Minister demanding government intervention, and assurances that promises made will be kept.
“This is a clear breach of the deal to get Virgin back to flying as a strong second airline in Australia,” it wrote in the letter, sent by seven different unions.
“It will see Virgin scrap for business and it will lower standards on service and safety. It will result in the loss of many more jobs and could herald the demise of Virgin,” it warned.
In a separate statement to Business Insider Australia, Bain managing director Mike Murphy downplayed those concerns.
“We are committed to the strategy Virgin Australia announced in August, when the company outlined its plans to protect thousands of jobs, invest in technology and honour all employee entitlements,” he said.
More to come.
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