Virgin Australia CEO Paul Scurrah to exit after sale complete

Virgin Australia CEO Paul Scurrah will leave the airline once the sale to Bain Capital is complete.

Departing Virgin Australia CEO Paul Scurrah. Photo: Glenn Hunt

Virgin Australia CEO Paul Scurrah will leave the airline once the sale to Bain Capital is complete, with former Jetstar CEO Jayne Hrdlicka to replace him.

An announcement to the ASX on Thursday followed days of intense speculation about Mr Scurrah’s future, after reports of a falling out with the new owners over the airline’s recovery strategy.

Administrator Vaughan Strawbridge delivered the announcement, saying Mr Scurrah had done an “exceptional job” throughout the process of administration, that began in April.

“It is a testament to his leadership that we have been able to stabilise the business and achieve a sale in a timely and orderly manner,” Mr Strawbridge said.

He denied the airline would be relaunched as a low cost carrier, but rather a hybrid airline positioned somewhere between Jetstar and Qantas.

Mr Strawbridge confirmed it was the intention of Bain to appoint Ms Hrdlicka as CEO once the sale transaction was completed, which was expected to happen early next month.

“Jayne has strong aviation credentials. She is very focused on seeing the business succeed and I wish Virgin Australia well under her leadership,” said Mr Strawbridge.

Ms Hrdlicka was “added” to the airline’s workplace intranet site on Wednesday night, despite no formal announcement about her appointment.

Although there's been no formal announcement, Jayne Hrdlicka has joined Virgin Australia according to the workplace app.

The American-born economist and businesswoman previously worked for Bain in the US and again in Australia, and spent eight years with the Qantas Group, including six-years as Jetstar CEO.

She left the airline to head up a2 Milk but stayed for less than 18-months, citing excessive travel demands.

Ms Hrdlicka arrived in Brisbane just over a fortnight ago and completed her quarantine period on Monday.

Virgin Australia went into voluntary administration on April 21 with debts of $6.8bn, triggering the search for a buyer that led to Bain Capital.

The US private equity firm committed $3.5bn to the deal which was voted up at the second creditors meeting last month.

In the later stages of the sale process Bain had backed Mr Scurrah and his vision for Virgin Australia, committing to the retention of business class and lounges, as well as at least 6000 of the 9000 employees.

Mr Scurrah had also been adamant the airline would return to international flying as soon as possible despite the fleet being limited to Boeing 737s.

As recently as October 1, Mr Scurrah told The Australian it was not an impossible ask to bring the airline out of administration in the current COVID crisis, due to the “stronger balance sheet and lower cost base”.

“We are setting ourselves to focus on the existing Virgin customers, making sure they get what they want, making sure we provide the product that they want,” he said.

“The market promise we’re making is about being the best value airline in the country for business and leisure travellers.”

Queensland Treasurer Cameron Dick, who recently signed a deal to invest $200m in Virgin Australia, declined to comment on the latest developments at the airline.

A Virgin Group spokesman also refused to comment on Mr Scurrah’s departure, but said the company remained in active discussions with Bain about the extension of the trademark licence, and an estimated $100m investment.

“We are very proud of the difference that Virgin Australia has made to the Australian market and its flyers over the past 20-years and believe the airline has an important and active role to play going forward,” the spokesman said.

On Wednesday the Transport Workers Union suspended enterprise bargaining negotiations with Bain until clarification was provided over Mr Scurrah’s position.

TWU national secretary Michael Kaine will address the media shortly.

Australian Services Union assistant national secretary Emeline Gaske said they were seeking an urgent meeting with Bain Capital following the “explosive news about the Virgin CEO”.

“Bain has an obligation to be honest with Virgin employees about their plans,” Ms Gaske said.

“Between COVID, stand-downs, redundancies and management pushing cuts to pay and conditions, they’ve been through absolute hell these last seven months. It is unacceptable that on top of this Bain is trying to cut workers conditions down to the bone.”