Unions push back on Jayne Hrdlicka as potential Virgin CEO

With a hard line history at Qantas’ Jetstar, Virgin unions say they don’t want Jayne Hrdlicka to become Virgin’s CEO.

Jayne Hrdlicka would not have union support as CEO of Virgin. Picture: Hollie Adams

A key union in the Virgin Australia administration is believed to be pushing new owner Bain Capital to guarantee that former Jetstar chief executive Jayne Hrdlicka will not have a key role in running the airline following the $1.65bn deal struck last Friday with administrator Vaughan Strawbridge.

The developments came as ABC TV’s Four Corners reported on Monday that Virgin Australia chairman Elizabeth Bryan knew the airline was in trouble well before the COVID-19 crisis.

Ms Bryan took on the role in 2015, four years after John Borghetti began his costly airline transformation, pitting Virgin Australia against his former employer Qantas.

“As soon as I started to understand my way around the numbers and where it all worked out, it was very clear to me that the company was over-leveraged and that it needed a capital raise,” Ms Bryan told Four Corners.

“John Borghetti did build Virgin and he did build a good airline. He did not build a good enough business.” In an interview with The Australian on Monday, Transport Workers Union national secretary Michael Kaine expressed a hope that Bain’s deal to buy Virgin would not see the “new owners throttling Virgin’s collegial working culture”.

“We don’t want to see Virgin run in a dictatorial fashion which silences the workforce and treats us as a cog in the machine,” Mr Kaine said.

He said Bain needed to show that it was committed to maintaining Virgin “as a robust second airline” and was not going to “use Virgin to feather the nests of wealthy investors”.

Bain has said publicly that Mr Scurrah will remain as chief of the airline under its ownership.

But expectations are that Ms Hrdlicka, who has been an adviser to the Bain bid, will play a senior role as a director or adviser to the Bain-owned airline.

While Mr Kaine did not discuss Ms Hrdlicka directly he said he would be concerned at moves to significantly change the culture of Virgin.

“We are resolutely opposed to new owners throttling Virgin’s collegial and productive working culture,” he said.

“Virgin workers are invested in the company’s future because, up to now, it has valued their commitment and input and is willing to work with its staff to get the best out of them.”

Mr Kaine’s comments are a shift in the public stance of the TWU, which had refused to follow other Virgin unions in backing a particular bidder.

Deloitte’s Mr Strawbridge informed the airline’s bond holders, who are owed $2.1bn, that he had rejected their proposal to recapitalise the airline due to its “highly conditional nature”.

The group of more than 6000 individuals and global institutions submitted the late bid last Wednesday, proposing to swap the debt for equity and allow management to get on with the job of restructuring the airline.

Meanwhile, Ms Bryan said that in the end, it was the board’s decision to remove Mr Borghetti. While Mr Borghetti was not interviewed, Four Corners quoted the former Virgin CEO saying that he first flagged leaving the airline in 2016 but was asked to stay on.

“A CEO runs the operations of a company and not a board. And what the board can do if they don’t like the way the CEO is running the company is to change the CEO,” Ms Bryan said. “And that’s eventually what the board that I led did.”

Former Queensland Rail and DP World CEO Paul Scurrah replaced Mr Borghetti in March 2019, and immediately went about carving costs out of the airline.

He told Four Corners it was obvious to him the balance sheet wasn’t as strong as it should be and it was vulnerable to a “black swan event”.

“We often talked about our plans addressing that balance sheet to get us into a stronger position, should something like COVID come along,” he said.

“… it came along much sooner than we were ready for.”

Two other unions representing Virgin workers publicly backed rival bidder Cyrus, arguing that it was the best fit for the airline, and would take a more accommodating attitude towards staff. On Monday, federal secretary of the Australian Licensed Engineers Association, Steve Purvinas, credited his union’s actions in supporting Cyrus for the fact that Ms Hrdlicka would not become chief executive of the new Bain-owned Virgin.

He said workers at Jetstar remembered her hard-line approach when she was running that airline.

“We were pleased when Bain said that Hrdlicka would not be the chief executive,” he said.

“She can be a hard negotiator when it comes to dealing with unions.

“We were strongly against her as being chief executive of Virgin because of her background with Qantas and her minimal experience in running an airline.”

Mr Kaine said Bain needed to be able to prove that its deal signed last week could “meet the public interest test.”