Virgin Australia’s resilience its strength, says airline CEO

In his first 12-months at Virgin Australia, Paul Scurrah has faced more challenges than many CEOs would in a lifetime.

Virgin Australia CEO Paul Scurrah will mark his first year with the airline next month. Picture: Britta Campion

After almost a year as Virgin Australia CEO, Paul Scurrah could be wondering what on earth he’s done to deserve such misfortune.

From an aircraft order for a plane no one wants to fly in to a global health crisis smashing airlines, Mr Scurrah has faced almost every challenge imaginable in the past 12 months.

And it’s not over yet.

As Scurrah strives to get Virgin Australia back into the black for the first time in eight years, 750 jobs are being cut, with dozens more to follow due to the downsizing of budget carrier Tigerair’s fleet and the axing of two bases.

There is a question mark over major shareholder HNA as a result of a reported takeover by China, with the intention of selling off the company’s airline assets.

The share price is at a record low, and one of the most important jobs in the airline, that of ­Velocity CEO, is vacant.

Far from being overwhelmed by the scale of the task at hand, Scurrah remains surprisingly upbeat, insisting he’s as motivated now as when he took over from John Borghetti last March.

“When you walk into these jobs you have to be realistic about the fact left-field curve balls can come your way,” he tells The Australian.

“You don’t want to be dealing with them but you have to deal with the cards you’re dealt, and that’s where we find ourselves.”

Certainly, there have been some wins along the way for Scurrah. After facing the prospect of taking delivery of the airline’s first Boeing 737 Max 8 last November, he was able to negotiate a deferral of the 48-aircraft order, and switch 15 of the Max 8s to Max 10s.

Scurrah then oversaw the buyback of a 35 per cent stake in the loyalty program, handing back full control of Velocity to Virgin, and secured coveted slots at Tokyo’s Haneda Airport for a new Brisbane-Tokyo route. But the fast-expanding coronavirus crisis is now looming as a threat to the service, due to begin on March 29.

No relaxation of the restrictions

It’s a situation Scurrah is watching closely but unlike others in the travel industry, he will not demand a relaxation of the restrictions designed to contain the deadly COVID-19. Instead, he’s focusing on the opportunities the situation presents.

“We just have to adjust to those circumstances. I’m not about to tell government how to do their job but what we are doing is making sure that we’re helping to spread the message of how low-risk air travel is,” he says.

“We’re predominantly a domestic airline. We’re heavily leveraged to this market and we believe there is a good opportunity to redirect some of the demand to our domestic network, and that’s what we’re focused on doing.”

The coming months promise more turbulence for the airline, as a review of suppliers and agreements is finalised. The examination is likely to spell an end to some questionable deals Virgin Australia signed under Borghetti, and more aircraft changes are also in the pipeline — raising the prospect of further ­upheaval for crew.

No struggle to survive

But any suggestion that Virgin Australia could struggle to survive as a business in the event of protracted travel restrictions is quickly dismissed.

“I think that’s the big unknown about us. We’re a very resilient business and we do have levers we can pull,” Scurrah says.

“We carry more than $1bn in cash on our balance sheet and we have been taking pretty drastic ­action to make sure that stays the case.

“It’s well known in the market that we have to improve our cost base, but with that really healthy revenue position it gives us a bright future.”