Virgin Australia on the ball with Qatar, Rex and IPO talks

Would you guess she’s a tennis fanatic? Jayne Hrdlicka’s tennis-themed takeover codenames have been revealed as the talks with Qatar, known as Project Doubles, drag on.

The project code names are an apt reflection of Virgin chief executive Jayne Hrdlicka, who also chairs Tennis Australia, host of the Australian Open Grand Slam. Picture: Lyndon Mechielsen

As negotiations drag on between US private equity giant Bain Capital and Qatar Airways over the proposed purchase of a stake of about 19 per cent in Virgin Australia, it can be revealed the codenamed “Project Doubles” isn’t the only tennis-styled deal on the court.

The airline also has Project Match and Project Game on the go – the secret code names for the initial public offering and the currently scrapped talks to buy regional carrier Rex.

The code names are an apt reflection of Virgin chief executive Jayne Hrdlicka, who also chairs Tennis Australia, host of the Australian Open Grand Slam.

Hrdlicka plans to leave Virgin as soon as the nation’s second biggest airline installs a new CEO, and succeeding with Project Doubles would be a fitting end to her time at the airline – and financially profitable, given her equity stake.

It’s been a traumatic few years for the polarising boss. She did a remarkable job restoring Virgin to profitability after its collapse and preparing it for a postponed float, but there was growing discontent among exhausted frontline staff who worked hard during the restructure and wanted a greater share of the profit pie upon its recovery.

Anthony Albanese at the Australian Open tennis Jayne Hrdlicka and former AFL CEO Gillon McLachlan. Picture: Michael Klein

Add to that the tragic death of her husband in May last year and now the very recent death of her father, and Hrdlicka is probably hoping for a resolution on Project Doubles soon.

Hrdlicka, who previously worked at Bain before running the Qantas low-cost unit Jetstar, was parachuted into the top job at Virgin just after Bain snapped it up from administrators in 2020.

The appointment at first infuriated unions who had backed the Bain takeover on the grounds that Paul Scurrah – the CEO at the time of collapse – would remain the boss.

Hrdlicka smoothed things over for a time, but on-time performance levels took a knock last year and coincided with the now-resolved threat of industrial ­action.

Just who will next take the reins at Virgin next is dependent on what happens with Project Doubles.

Qatar would undoubtedly want a say if the deal proceeds. Clearly the ownership structure of the airline is relevant for the two shortlisted candidates too.

It’s been a tumultuous four years for the Australian aviation industry.

First, the pandemic felled a highly-leveraged Virgin.

Then Rex made a false call – cited in documents seen by The Australian – that Virgin would not return and tried to shift from regional subsidised player to a major contender on the Sydney-Melbourne-Brisbane routes. It collapsed this year after failing to match the big two, and failing to sell itself to Virgin.

Bonza failed this year too, joining a long list of start-up leisure carriers that thought they could make it in Australia.

And Qantas suffered from numerous problems, many outside its control.

Aircraft groundings during the pandemic nearly felled the Flying Kangaroo, and the airline then struggled to cope with pent-up demand for travel once borders reopened because it had cut so many jobs during the groundings and had too few airworthy aircraft. Performance levels slumped, bags were lost, the airline sold tickets on flights it had already cancelled and it made travel credits difficult to use.

Then-CEO Alan Joyce fired 1683 baggage handlers at the height of the pandemic, in a move subsequently found to be illegal.

Federal Court judge Michael Lee said at the time that Qantas “reverse engineered” its outsourcing decision.

Even though Joyce has now gone, the ramifications of the baggage handler decision live on. Justice Lee is yet to rule on the compensation Qantas must pay and the size of the fine the airline must pay.

Current Qantas boss Vanessa Hudson appears to be taking a much more collegiate approach to the 14 unions that operate within the airline, and last week announced a new deal with Qantas mainline domestic and international flight attendants.

It’s understood new Qantas chair John Mullens has recently met TWU National Secretary Michael Kaine.

While Qantas appears back on track under a new CEO, a stronger Qatar-backed rival in Virgin could threaten its near record profitability.

It’s understood Project Doubles is yet to be formally put to the Foreign Investment Review Board. The Albanese government blocked Qatar from increasing flights to Australia last year in a decision that sparked anger and led to allegations Canberra had been unduly influenced by ­Qantas.

Treasurer Jim Chalmers recently announced that the government would attempt to fast-track takeover processes for foreign companies wishing to invest in Australian companies, but state-owned acquirers would face more detailed investigation.

At the time of its collapse, Virgin’s owners included government-backed carriers Singapore Airlines and Abu Dhabi’s Etihad, along with Chinese groups HNA and Nanshan, a small portion of listed shareholders and founder Virgin Group, which still held a 10 per cent stake. Qantas has a profit-sharing arrangement on certain flights with Dubai’s Emirates.

The question now is whether the Qataris have improved their government lobbying this time.

Originally published as Virgin Australia on the ball with Qatar, Rex and IPO talks