Virgin CEO Dave Emerson talks IPO and his leadership plans
Virgin Australia CEO Dave Emerson has broken his silence since his appointment to the top role, as the airline relists on the ASX.
Business
Don't miss out on the headlines from Business. Followed categories will be added to My News.
After years of planning and investor meetings, nothing was going to stop Virgin Australia’s owner Bain Capital relisting the company on the ASX – not even a major Middle East conflict.
As the bell sounded to mark the airline’s return to the exchange, listing at $2.90 a share, no one was more relieved than new chief executive Dave Emerson. Virgin Australia hit the ASX boards at $3.13 at noon on Tuesday and closed at $3.23.
Bain Capital raised $685m from the float after nearly five years of ownership.
“I would just say we’re excited to get over the line on the IPO. It’s been a long journey and it’s a great milestone recognising all the progress that we’ve made, so there’s no better timing than the present,” he said.
“If we waited for things to settle down, I don’t know how long we’d be waiting. I think that’s aviation – there’ll always be something new and different happening, so that’s part of the attraction of the industry, but it also means you have to be fluid and adaptable.”
Although much is riding on the IPO in terms of Virgin Australia’s corporate reputation, Mr Emerson said it would have little impact on the airline’s success and its day-to-day operations.
“We’re not doing an IPO to raise capital – we have enough capital in the business. In fact, we’re generating capital, which is a great position to be in,” he said.
“Once it’s over, it’s right back to work for me and the team on how do we keep improving the business because the IPO won’t serve our customers any better, won’t make our product any better. It’s just a milestone along the way, but we have to keep focusing on lifting the business performance.”
Just over three months into the role of CEO, the 58-year-old said he was a different style of leader to predecessor Jayne Hrdlicka, and possibly not as comfortable in the spotlight.
Mr Emerson’s “top priority” was to be accessible to his people, and he has spent much of his time since his appointment flying around the country meeting pilots, cabin crew, engineers and ground staff who keep Virgin Australia aloft.
“My view is, the heroes in our business are the people who deliver our results to our customers everyday on the frontline and it’s a team effort, it’s not one individual,” he said. “It is not a particular desire from my perspective to be the focal point of everything about Virgin.”
As one of the first executive hires made by Ms Hrdlicka after Bain Capital bought Virgin Australia from administration, Mr Emerson oversaw much of the business transformation that occurred to steer the airline back into the black.
He was previously an airline strategy consultant at Bain & Co, and said he considered his appointment as “chief commercial officer” at Virgin to be the capstone to his career.
“I was super-excited for it, and indeed it was the best job I had ever had in my life,” he said. “I was super-proud of what I accomplished and what we’ve done as a team, and I really thought that this would potentially be my last job.”
Nevertheless, he put his hand up for Ms Hrdlicka’s job when it was announced she would transition out of the role, but he was cagey about the process that followed, which unfolded over more than a year.
Fellow executive Paul Jones was widely regarded as the frontrunner for the position but withdrew after pressure from the Transport Workers’ Union and Employment Minister Murray Watt, due to his role in the unlawful outsourcing at his previous employer Qantas.
Mr Emerson said he got on “really well” with the whole executive leadership team, having gone through the “hard yards together”.
“That sort of brings everybody together, and I think that I have a great relationship with all of them, including Paul,” he said. “Paul has been super-energised – as you know, he’s taking over some of my previous responsibilities (as chief commercial officer). He’s dived right in and is doing a great job, so I think he’s very happy.”
In terms of what’s ahead for Virgin Australia under the CEO-ship of Mr Emerson, he indicated orders for widebody aircraft were a possibility, so the airline could operate long-haul international routes in its own right.
Under a deal with Qatar Airways, which resulted in the Gulf carrier buying a 25 per cent stake in Virgin, new wet-lease flights to Doha recently began from Sydney and Brisbane, with Perth scheduled to follow this week.
“The Qatar tie-up is going to give us great insight into the economics of long-haul flying, and once those flights really get going we can see how they perform over a full year to 18 months,” Mr Emerson said.
“Then we can see what that would mean for our own economics, and whether we can put a business case together that would meet our capital management framework for long-haul investing.
“So really what it comes down to is, do we have a business case that would return our shareholder money if we went and bought widebodies, and we don’t have that business case yet.”
Then there’s the promise of “pets on planes” made by his predecessor, with Mr Emerson confirming trials are due to start before the year’s end.
Under the proposal, small dogs and cats will be able to board with their owners, in carriers which will have to fit under the seat in front.
Two rows on selected flights will be designated “pet friendly” and other passengers will be informed at the time of booking if their service is carrying furry friends.
Mr Emerson said it had been a more complicated process than they thought it would be, resulting in the delayed start to the trials.
“Any time you’re doing something that’s new to the country and new to regulations there’s just a lot of stuff you have got to work out, so we had to work that out,” he said.
“The security screening process, the food health-and-safety regulations have taken longer than we’d hoped, but we are getting closer.”
Originally published as Virgin CEO Dave Emerson talks IPO and his leadership plans
New iron ore mine shores up Rio Tinto, Rinehart partnership
Rio Tinto and Australia’s richest person, mining magnate Gina Rinehart have pulled the trigger on a new iron ore mine after working through a four-year-long approval process.
Tycoon Andrew Roberts to get out of construction with $20m hit
A famed name is heading out of the building industry after pledging $20m to pay staff and make them whole following the collapse of his building company, Roberts Co.