Virgin Australia board to take two Chinese directors

Virgin Australia will take two new directors representing its Chinese shareholders, HNA Group and Nanshan Group.

Virgin Australia chief executive John Borghetti. Picture: Renee Nowytarger

Virgin Australia’s two major Chinese shareholders, HNA Group and Nanshan Group, have hand-picked two new ­potential directors to join the ­airline’s board.

HNA — the owner of China’s fourth-biggest carrier Hainan Airlines — has chosen its chief innovation officer Nang Qi.

Before taking up his chief information officer role with HNA, Mr Qi was deputy general manager of the company’s finance department and president of its import and export business.

Nanshan, which has sprawling interests in aluminium and property, has elected Chien-tsung Lu, who is the company’s vice-chairman of its regional airline Qingdao Airlines.

At Qingdao Mr Lu is responsible for flight operation, revenue management and international engagement. He previously served as Dean of Nanshan Aeronautical College.

To accommodate the new additions to its board, Virgin shareholders have been asked to amend the airline’s constitution to increase the maximum ­number of directors from 10 to 15.

With Mr Qi and Mr Lu joining the board, the number of Virgin’s directors will increase to 11.

Virgin became 40 per cent owned by Chinese companies after it completed a $1.1 billion capital raising earlier this year to shore up its balance sheet and tackle its debt pile.

Hanshan built up its stake in Virgin through a placement of new shares while Nanshan’s stake was acquired through the buyout of Air New Zealand’s shares in the company.

The 20 per cent stakes taken by HNA and Nanshan in Virgin both came with the promise of board representation at the airline’s table. The appointments are to be ratified at the company’s annual general meeting on November 16.

Shareholders in Virgin will also be asked to vote in favour of the company’s remuneration report which revealed that the airline’s chief John Borghetti was paid $2.86 million for the 12 months to June 30.

Rob Sharp, the boss of Virgin’s budget carrier Tigerair, was the next highest paid executive with $1.06m while the airline’s head of cargo, Merren McArthur, rounded out the top three with a pay packet of $1.04m. Virgin chair Elizabeth Bryan picked up $250,000 for the year.

Board members at Virgin are paid $85,000 a year with an additional $10,000 for each committee they are enlisted to.

The large pay packets came despite the airline posting a statutory loss for the 2016 financial year of $224.7m, which came from the costs of its wideranging restructure.

Aside from its investment in Virgin, HNA will work on a strategic level with the airline and will together launch flights to Beijing and Hong Kong from June 2017. HNA has a fleet of 1250 aircraft operating flights to more than 200 destinations.