How Jayne Hrdlicka got into the pilot’s seat at Virgin Australia

It was fitting one of the first congratulatory messages Jayne Hrdlicka received on Thursday was from her former boss and mentor, Alan Joyce.

Jayne Hrdlicka (black dress) with her partner attending Alan Joyce's wedding to his partner Shane Lloyd. Photographer: Adam Yip

It was fitting one of the first congratulatory messages Jayne Hrdlicka received on Thursday was from her former boss and mentor, Alan Joyce.

When the 57-year-old former Jetstar chief executive finally gets to run her own airline in November, she will now be pitted against the Irishman. But the dynamic between the two will be very different to that between Joyce and former Virgin chief executive John Borghetti, who was driven to prove himself against his former rival for the top job at the national carrier.

The American-born Hrdlicka, who left Qantas after eight years, in July 2018, to run a public company, a2 Milk, has remained friends with the Joyce. Hrdlicka was one of the 120 guests who gathered on the top floor of the Museum of Contemporary Art last November to celebrate his wedding to partner Shane Lloyd.

It was a star-studded event with a guest list that included former governor-general Peter Cosgrove, former union leader and KPMG executive Paul Howes and his wife, Qantas executive Olivia Wirth, Qantas chair Richard Goyder and former chair Leigh Clifford, former David Jones CEO Paul Zahra, and former US ambassador to Australia John Berry.

Hrdlicka, who has just come out of quarantine after moving to Brisbane from Melbourne with her husband two weeks ago, will bring a very different approach to her job than Borghetti.

While she declined to be interviewed on Thursday, friends say she moved north from her Melbourne home with the expectation she would be a member of the Virgin board — it was speculated she would be chairman and not the CEO.

Bain was keen to have her aviation skills in Virgin’s head office, and given the border shutdowns prevented commuting, she decided to move her family to Brisbane (one of her sons is in Australia, the other lives abroad).

The added complication was her husband’s health, which led the family to apply for a quarantine exemption because of his compromised immune system from his chemotherapy treatment. Friends say this was the reason she was allowed to undertake home quarantine.

Borghetti’s experience at Qantas was at the top of the market, and he took over at Virgin Australia in 2010 with a vision of taking the challenger more upmarket, and winning a bigger share of the corporate market.

In contrast, Hrdlicka’s experience is at the low cost end of the market, having run Jetstar for six years, a period which included battles with the unions which some in the movement still hold against her. Before that she worked extensively on strategy for Qantas, and in her former consulting days at Bain worked with eight airlines around the world.

During the negotiations for the sale of Virgin which was finalised in a deal ratified by creditors in August, there were reports that some union representatives refused to be in discussions on occasions if Hrdlicka was present.

Qantas CEO Alan Joyce. Picture: David Swift.

Indeed, with the surprise news on Thursday that Virgin chief Paul Scurrah had decided to resign, there are those who believed that it was Bain Capital’s plan all along for her to run the airline, bringing her much tougher approach to cost control and dealing with Virgin’s unions than Scurrah would have.

Sources close to Hrdlicka dispute this. One claims she was only asked earlier this week by Bain’s Australian boss Mike Murphy to be CEO.

They point to the fact that she took on a directorship of Hawaiian Holdings, the parent company of Hawaiian Airlines, in August as proof that she wasn’t preparing to take the Virgin CEO role.

She is also a year into her second three-year term as president of Tennis Australia.

But one source said Hrdlicka, who has kept a low key approach through her role as an adviser to Bain during the negotiations, has been privately critical of some aspects of Scurrah’s role as Virgin CEO including his decision last year to spend $700m buying out the rest of loyalty group Velocity, blowing out it debt levels.

Those investors who backed the subsequent bond raisings in Australia and the US needed to fund the deal ended up losing most of their money after it went into administration.

Bain has a lot at stake, having invested $3.5bn to buy Virgin during the worst aviation market in decades and when many state borders are closed or partly closed.

Scurrah’s apparent role as chief executive of Virgin during the negotiations for its sale was critical in winning the support of the union movement in accepting the deal put by Deloitte’s Vaughan Strawbridge, which was finalised with a vote of creditors in August.

With Virgin’s then 9000 staff listed as creditors, the view of the unions was important in the creditors’ vote.

Scurrah’s contacts with the Queensland government were also instrumental in negotiating a deal which saw the state inject $200m into Virgin.

Those deals done, Bain needs to do whatever it takes to make its investment work.

Bain issued a statement on Thursday that its strategy for running Virgin had not changed.

“While this year has been the toughest in global aviation history … there has been no change to the strategy Virgin Australia announced in August, when the company outlined its plans to protect thousands of jobs, invest in technology and honour all employee entitlements,” Bain said in a letter to unions. “So far we have invested $3.5bn into Australia through our acquisition of Virgin Australia.

“Jayne, Bain Capital and the Virgin management team are very aligned in our views that Virgin will not be repositioned as a low- cost carrier.

“Virgin Australia will be a ‘hybrid’ airline offering great value to customers by delivering a distinctive Virgin experience at competitive prices.”

Exactly what “hybrid” means is in the eye of the beholder, but it is understood Hrdlicka has no plans to turn Virgin into a low-cost carrier. She will also retain the airline’s domestic lounge network, albeit one which is expected to be lower frills.

The Transport Workers Union lashed out on Thursday, declaring that Scurrah’s departure and Virgin’s statement about being a hybrid carrier would allow Qantas to become a virtual monopoly in Australia.

Departing Virgin Australia CEO Paul Scurrah,Picture: Lyndon Mechielsen

TWU national secretary Mike Kaine said Virgin was “in turmoil”, accusing Bain of being misleading in its public plans for the airline in what could be “one of the biggest corporate swindles in Australian history”.

He lashed out Bain, declaring that it had “not made a good start” and was involved in “backroom deals which were not in the public interest”, overseeing an airline industry in Australia where Qantas was now “able to call all the shots.”

Hrdlicka’s first challenge may well be handling the unions.

But with the economy in recession and thousands of jobs being lost in the airline industry, there will be a limit to what the unions can do.

In her time at Qantas, Hrdlicka trained under a very hard nosed Joyce who was prepared to ground the airline in 2011 after a dispute with the unions.

Observers describe Hrdlicka as capable of great charm, but also pragmatic.

Lean and fit, she has had a long interest in tennis. She was known to schedule morning meetings during her tenure at A2 Milk to ensure she had her daily workout and encouraged staff to do the same.

She was born in Kansas to a Czech-born father who migrated to the US in 1948. She graduated from Colorado College with a degree in maths and economics before doing an MBA at the Tuck School of Business at Dartmouth College. She worked at management consulting firm Bain (different from private equity firm Bain Capital) first in the US and then in Australia from 1994.

She joined Qantas in 2010 before taking over as the third CEO of Jetstar in July 2012.

Hrdlicka’s time as chief executive of a2 began in early 2019 and ended much sooner than many expected with an announcement in December that she would be stepping down.

Hrdlicka blamed her departure on the fact that the job involved much more travel than she had envisaged including regular trips to New Zealand and China.

But she also clashed with chair David Hearn over the company’s strategy. Announcing her early departure, she also made reference to the “health and wellness priorities” of her family, a reference believed to be to her husband’s treatment for cancer.