MIAMI – Virgin Australia (VA) CEO Paul Scurrah will step down once the airline is transferred to new owner Bain Capital, according to a report by Reuters. Jayne Hrdlicka, the former head of Qantas’ budget offshoot Jetstar (JQ), will replace him. The change comes amid reports that Bain seeks to attract more travelers with a “hybrid” strategy.
Virgin Australia entered voluntary administration in April as the airline struggled under government-imposed COVID-19 travel bans. Bain agreed to buy VA in June for A$3.5bn (US$2.47bn).
“Hrdlicka will look to lower the cost base even more than Scurrah had planned and to. She’ll capitalize on knowledge gained from years of working at Virgin’s biggest rival”, said Brendan Sobie, an independent aviation analyst. “She knows exactly where to position Virgin Australia to finally be profitable, assuming decent market conditions.”
Creditors Voted for Bain Purchase
Creditors owed nearly A$7bn (US$5bn) last month approved Bain’s purchase of the airline. Employees, the largest creditors by number, voted overwhelmingly in favor of the deal.
Scurrah had clashed with Bain over wanting to maintain a more premium offering than desired by the US firm, two people with knowledge of the matter said on condition of anonymity. Administrator Vaughan Strawbridge of Deloitte said he had reaffirmed with Bain that VA airline would not be repositioned as a low-cost carrier once Hrdlicka took over.
“Virgin Australia will be a ‘hybrid’ airline, offering great value to customers by delivering a distinctive Virgin experience at competitive prices,” Strawbridge said in a statement. “This will appeal to the full spectrum of travelers, from premium corporate through to more budget-focused customers.”
Bain Managing Director Mike Murphy said his firm was committed to the strategy announced in August. At that time Bain said it would work to protect thousands of jobs, invest in technology, and honor all employee entitlements. However, Virgin itself has said about 3,000 jobs will go when the deal takes place. Around 6,000 employees will remain.
Virgin said then it aimed to be the “best value” carrier in the market rather than a low-cost carrier. It would maintain a business class offering and network of airport lounges.
On a final note, at the end of September, eight VA unions joined to ask Bain Capital for no more job cuts amid the current crisis. The organizations also express their will to co-operatively negotiate on the matter.
Featured image: Brandon Farris