Paul Scurrah resigns as Virgin Australia chief executive

Virgin Australia CEO Paul Scurrah will step down from his role after a year of turmoil at the struggling airline.

Paul Scurrah has resigned as chief executive officer and managing director of Virgin Australia, following a year of turmoil for Australia’s second airline.

He will be replaced by former Jetstar boss Jayne Hrdlicka when the airline is handed over fully to US private equity firm Bain Capital in early November.

Mr Scurrah will remain in his role until then.

“Over the last 18 months, I have had the great privilege of being the CEO and Managing Director of the Virgin Australia Group,” Mr Scurrah said in a statement today.

“Whilst it has been the most challenging time in aviation history, I have continued to be so proud of the way my team and our entire organisation has fought to save this airline and to keep competition alive and well in Australia.

“We have succeeded in not just ensuring the future of the company, but also reset the business to ensure it is well placed to deliver for Bain Capital for many years to come.”

He said he made the decision after “some long discussions with my family”.

“The time feels right, and I know the business will be in good hands,” he said.

The announcement comes amid speculation Bain planned to transform Virgin Australia into a low-cost carrier, reneging on assurances made in its bid to buy the struggling airline.

Virgin Australia CEO Paul Scurrah at the airline’s Brisbane headquarters. Picture: Lyndon Mechielsen

There had been reports of recent tension between Bain and Mr Scurrah, who hoped to keep Virgin Australia as a full-service airline.

Vaughan Strawbridge from Deloitte said he has reaffirmed with Bain that Virgin Australia would not go down the low-cost route.

“Virgin Australia will be a ‘hybrid’ airline, offering great value to customers by delivering a distinctive Virgin experience at competitive prices,” Mr Strawbridge said in the statement.

He said Mr Scurrah had done an “outstanding job” at the helm of the airline during the administration process.

“His exceptional leadership enabled us to stabilise the business and achieve a sale in a timely and orderly manner,” Mr Strawbridge said.

“It is testament to his leadership that we have been able to complete this sale and the business is well positioned to play its vital role in the rebuilding of the Australian aviation industry and economy more broadly.”

Sources have told the Australian Financial Review other executives at the airline may follow Mr Scurrah’s exit.

The sale of Virgin Australia to Bain was finalised last month after the debt-ridden airline slumped into voluntary administration in April.

The airline has since announced it would streamline its fleet and axe budget subsidiary Tigerair, but keep its two-class cabin structure – business class and economy – and return business lounges when travel demand picked up.

Tennis Australia president and former Jetstar boss Jayne Hrdlicka will replace Paul Scurrah as chief executive of Virgin Australia. Picture: Fiona Hamilton/Tennis Australia

But Nine newspapers report Bain Capital will renege on its promises and strip Virgin Australia back to a low-cost carrier, which would give full-service rival Qantas a monopoly in Australia.

US-born Ms Hrdlicka, who has experience leading a budget airline at Jetstar, more recently served as president of Tennis Australia.

She has also been a key figure at Bain Capital, having reportedly been part of the team that helped secure the firm’s purchase of Virgin Australia.

Mr Scurrah was tight-lipped about his rumoured exit when questioned yesterday.

“There’s been ongoing speculation for some and I’ve never been in the habit of commenting on speculation,” he said on Wednesday.

Earlier today, unions suspended talks about enterprise agreements at Virgin Australia amid the uncertainty over Mr Scurrah’s future.

Unions have been concerned about the rumoured exit of Mr Scurrah, who has connections to Queensland Labor. The Transport Workers Union (TWU) has a history of clashing with Ms Hrdlicka, The Australian reports.

Unions are concerned Bain will renege on promises made in its bid to purchase Virgin Australia. Picture: NCA NewsWire / Christian Gilles

The TWU has written to Bain seeking an urgent meeting to discuss Mr Scurrah’s future and whether it would uphold its pre-sale promise to keep 6000 workers, tiered cabin classes, airport lounges for business class travellers and the airline’s international network.

TWU National Secretary Michael Kaine said the reports of Mr Scurrah’s exit were a “serious and worrying development”.

“We are suspending negotiations on enterprise agreements while we seek clarification on these developments,” he said.

“For our part, we are engaged in talks in good faith. If the plan and scope of the airline as outlined in August by Bain Capital has already been scrapped then this is a serious betrayal that must be addressed,” he said.

Mr Scurrah was announced as chief executive and managing director of Virgin Australia in February 2019 after the resignation of former boss John Borghetti.

A year later, Mr Scurrah steered the airline through its worse year yet, after the COVID-19 pandemic, compounded by years of mounting debt, sent it into voluntary administration.

Rumours of Mr Scurrah being replaced by Ms Hrdlicka emerged after the Courier Mail revealed she was able to skip hotel quarantine after arriving in Brisbane — where Virgin Australia is headquartered — last week.

The newspaper said US-born Ms Hrdlicka was allowed to quarantine at a luxury Brisbane residence after being granted an exemption from Queensland Health as her husband is undergoing chemotherapy.

The TWU has also written to Prime Minister Scott Morrison, warning changes at Virgin Australia could result in even more job losses in an already devastated workforce.

“We want answers from the Federal Government also on these developments and how it expects to save jobs at Virgin,” Mr Kaine said.

“If confirmed it shows how the Federal Government has stood by and allowed a private equity firm to take over one of Australia’s most valuable assets and renege on commitments.”