Virgin Australia assures unions on jobs, strategy

Virgin Australia unions agree to resume talks with the airline following an assurance signed by incoming CEO Jayne Hrdlicka.

Virgin Australia crew members in April. Unions have secured a written assurance from new owners Bain Capital on jobs. Picture: Lyndon Mechielsen

Unions will return to the negotiating table with Virgin Australia’s new owners on Tuesday after receiving a written assurance on jobs and strategy.

The letter signed by incoming CEO Jayne Hrdlicka, Bain Capital’s Australian managing director Mike Murphy and administrator Vaughan Strawbridge, said they wanted to “reconfirm the plans for Virgin Australia and the intention to create a sustainable and viable airline”.

The assurances included “a workforce of approximately 6000 people”, on the condition their strategy was successfully implemented as the market recovered.

The letter also reaffirmed the commitment to a simplified all-Boeing 737 main line fleet; a two-class cabin offering; a network of lounges in key domestic locations and a continued commitment to regional and charter flying.

International flights would resume “once the global travel market recovers”, the letter said.

Unions had sought a number of assurances after pulling out of talks for new work agreements following the shock axing of chief executive Paul Scurrah.

Bain Capital had pledged to retain Mr Scurrah and the management team as the airline emerged from more than six months in administration.

But a month after the second creditors meeting overwhelmingly supported Virgin Australia’s sale to Bain Capital, the firm announced Mr Scurrah would be replaced by Ms Hrdlicka, a former Jetstar CEO.

The letter to union delegates pointed out the airline had not made a profit since 2012 as a result of an “uncompetitive cost base” and had cumulatively lost over $1.8bn.

“The only way to ensure Virgin Australia survives and thrives and generates the jobs we have said it will, is for us all to work together to reset the cost base,” the letter said.

“While a range of cost reduction measures have been implemented across the Virgin Australia Group, enterprise agreement negotiations remain critical to improving our competitiveness.”

A statement from the Transport Workers Union said they were pleased at the “positive statement” from Virgin Australia.

“It continues to be a difficult time for aviation and workers are doing everything they can to ensure standards in Australian aviation remain high, and that the travelling public throughout Australia has access to efficient and affordable air travel when restrictions are lifted,” the statement said.

Any outcome for Virgin Australia workers that rolls back existing pay and conditions, is likely to see Qantas employees face the same fate.

At Friday’s Qantas AGM, group chief executive Alan Joyce made it clear that he would expect unions to match any concessions made to Virgin Australia, in order to remain competitive.

The TWU remains at loggerheads with Qantas over plans to outsource ground handling operations, affecting 2400 jobs.

The airline is awaiting an in-house bid from the union, to keep the jobs from going to another firm like Menzies, Swissport or dnata.

A decision is expected next month.