Why Bain Capital dumped Jayne Hrdlicka as Virgin Australia CEO
Virgin Australia boss Jayne Hrdlicka was given no warning she was about to be axed by the airline’s US private equity owners, and was deeply upset by her treatment.
Virgin Australia chief executive Jayne Hrdlicka was given no warning she was about to be dumped by the airline’s US private equity owners, and was deeply upset by her treatment.
Sources close to the 61-year-old have revealed what transpired on Tuesday, and why even direct reports to the CEO were shocked by the announcement she was set to leave.
Virgin employees remain in the dark about the reasons, but it’s understood Bain Capital had been unhappy with her performance for as long as a year.
Late on Monday, the Boston firm that had paid $3.5bn for Virgin in 2020 and installed Ms Hrdlicka as CEO, told her she was out.
“She was shocked, the blood drained from her face and she cried,” said a high-level source.
“She did not see it coming at all, and nor did those around her.”
Staff were informed by email, followed by an “eight minute town hall” with Ms Hrdlicka.
Virgin Australia chair Ryan Cotton, a Bain Capital partner, sent an email and a 60-second video in response to the announcement, where employees noted he “sounded like an AI plant”. Virgin and Bain declined to comment on Friday.
Miami recruitment firm Korn Ferry is in talks with Virgin to find a replacement, suggesting Bain Capital is preparing to recruit from overseas for the job. Ms Hrdlicka only finalised the sale of her Melbourne home last year, after relocating to Brisbane, where Virgin Australia was based.
Bain may now opt for a trade sale, with the IPO widely seen as scuppered. “An IPO was never going to happen,” said a high-level source. “The market conditions weren’t right and Virgin’s figures weren’t close to good enough. Bain will be looking at other options now, such as a trade sale. Private equity firms don’t usually hang around for too long.”
Another source said the worst problem was that Virgin Australia had had a prime opportunity to benefit from Qantas’s recent woes but “was clearly not capable of executing”.
Some continue to point to Ms Hrdlicka’s high profile at the Australian Open in her capacity as Tennis Australia chair as a bugbear for Bain and a distraction from her day job.
For two weeks, Bain watched as their pick to rebuild Virgin Australia schmoozed with celebrities and politicians at the tennis tournament in Melbourne.
Ms Hrdlicka even treated her entire executive leadership team to a night at the Open, as Virgin Australia’s operational and financial performance floundered.
For months, Virgin Australia had trailed even Jetstar in on-time performance, with high cancellation rates and frequent flight delays. Data for January released this week show Virgin Australia falling further behind the Qantas Group, with almost a third of flights arriving late and 5.4 per cent cancelled.
No half-year results were made public after a modest full-year profit of $129m, which amounted to a mere 5 per cent of rival Qantas’s $2.45bn result.
And JPMorgan research delivered a further blow, highlighting that Virgin Australia’s yield on the important Melbourne-Sydney route had gone backwards since the pandemic, after the airline saw 45 of its top 50 corporate accounts jump ship to Qantas.
Sources said it all contributed to a loss of confidence in Ms Hrdlicka by Bain, which dominate the airline’s board.
Adding to the challenges facing the airline was the imminent start of negotiations for a new pilots’ agreement, with the union expected to demand substantial pay rises, after a 15 per cent salary cut post-administration.
A Virgin Australia statement said Ms Hrdlicka would remain in the job until a replacement was found but no one was willing to suggest a time frame.
On Tuesday, the outgoing CEO said the last four years had been “heavy lifting across the organisation during the toughest of times” and said she had “mixed emotions” about the decision.
It is expected that after leaving Virgin, Ms Hrdlicka will focus on her Tennis Australia role, which is up for renewal next year.
The 61-year-old who previously worked for Qantas, Jetstar and the A2 Milk Company, has two sons, 19 and 16.
After losing husband Jason Gaudin to cancer last year, Ms Hrdlicka seemed to take a lower profile at Virgin Australia, rarely speaking in public or doing media interviews.
But a senate committee hearing in September provided some insight into the challenges Virgin Australia was experiencing as Qantas’s main rival.
“It is very difficult. Many times there is characterisation of the Australian aviation market as a duopoly. We don’t see it that way,” Ms Hrdlicka told the committee examining the decision to deny Qatar Airways more flights into Australia. “We are a minority player against the 800-pound gorilla in our industry (Qantas). The industry functions more as a monopoly.”
At Thursday’s results, Qantas CEO Vanessa Hudson said she wished Ms Hrdlicka well.
The latest ACCC report on airlines shows Virgin Australia held 31.2 per cent of the domestic market. Qantas and Jetstar held a combined 61.8 per cent.
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