How Deloitte’s Vaughan Strawbridge succeeded in Virgin Australia’s rebirth

Deloitte’s Vaughan Strawbridge could reasonably be described as the man who saved the airline from financial ruin.

Virgin Australia’s seven month administration has finally come to an end, instilling the airline with a new lease of life. Picture: Patrick Hamilton/AFP

As the public face of the Virgin Australia administration, Deloitte’s Vaughan Strawbridge could reasonably be described as the man who saved the airline from financial ruin.

Lumbered with debts in excess of $7bn and unable to pay staff, Virgin Australia went into voluntary administration on April 20, amid deep uncertainty about the carrier’s future.

It was then up to Strawbridge and his team of John Greig, Richard Hughes and Sal Algeri to sort out the finances of 41 companies within the airline, unravel hundreds of leases and rental agreements, find a buyer in the middle of a global pandemic and retain as many of the 9000 employees as possible.

Strawbridge concedes the job at hand was perhaps the most challenging in Australian corporate history due to the extraordinary set of circumstances.

“It’s fairly unique to see a business whose revenue has reduced to 5 per cent in such a short period, and you’ve still your full cost base sitting there, and then there’s COVID,” he tells The Australian.

“All of those factors just create an environment where it’s incredibly challenging along with the uncertainty around when will flying return, and when will state borders open back up. If you go back 12 months no one could ever have thought we would be in this position.”

The solution was to condense about three to four years of work into three to four months, with the help of a rigorous bidding process and a strict timeline.

As a result, Deloitte signed a binding agreement with US private equity firm Bain Capital on June 26, two weeks before Victoria’s second COVID wave struck.

Had that contract not been in place when state borders were again closing and recovery models pushed further back, it’s unclear whether Bain would have gone ahead with the deal.

As well as the hard work of his own team, Strawbridge puts the success down to the close collaboration with Virgin Australia’s management, led by recently axed CEO Paul Scurrah.

The administrator admits he was sorry to see Bain let Scurrah go, after working closely with the former DP World and Queensland Rail chief executive from the start.

“Paul’s been brilliant throughout this. His leadership has been excellent and his ability to lead his team and work as a team with us has been phenomenal,” Strawbridge says.

“Paul and I talked about the objectives of the administration at the beginning and he’s helped us deliver what we wanted to do. He’s supported us all the way through to today.”

Scurrah returns the compliment, praising Strawbridge and the Deloitte team for “pulling off one of the most difficult challenges ever” in Australian business.

“The credit should go to them for having run a process that led to the right outcome,” he says.

“Some people were trying to give them advice to go in a different direction but it turned out to be exactly the right way to do it.”

As of Tuesday, Virgin Australia is wholly owned by Bain Capital following the final condition of the $3.5bn sale deal — the transfer of all 8.3 billion shares, and its delisting from the ASX. Despite his close working relationship with Scurrah, Strawbridge says the airline will do well under new CEO Jayne Hrdlicka. As a former Bain consultant, it was Hrdlicka who alerted the US firm to the airline’s administration and advised the company throughout the bidding and sale process.

Although the circumstances of her appointment upset many employees loyal to Scurrah, Strawbridge says Hrdlicka will be a “a powerful leader”.

“The business will be really successful under Jayne’s stewardship going forward and I know that’s a view Paul shares as well,” he says. “This will be an incredibly successful business.”

Hrdlicka will officially start in the role on Wednesday, spending the day at Brisbane Airport, meeting and speaking with frontline workers who are closest to the airline’s customers.

On Tuesday, a statement from the new CEO said it was “a privilege to join such a dedicated, hardworking and passionate team”.

“It’s been a hard journey and (employees) have shown incredible resilience and commitment to the future under the toughest circumstances,” Hrdlicka said.

She is expected to provide more details tomorrow on how Virgin Australia will look under Bain Capital’s ownership and what travellers can expect from the carrier.

Strawbridge suggests the airline is now in the best position possible to succeed.

“Virgin is set up to be successful in its own right, and I think it’s a really exciting future they have, playing where they want to play in the market,” Strawbridge says.

“It’s an awesome brand that people have a high level of connection to, so I think in its own right it’s going to be successful.”