Why Virgin Australia’s new owner became the Bain of Jayne Hrdlicka’s career
Facing mounting pressure from her Bain Capital bosses, Virgin Australia’s chief executive is leaving the airline and potentially ending the likelihood of a $3bn float this year.
It was a very unhappy marriage in the end. The divorce inevitable.
Bain Capital, frustrated by slumping yields and her deafness to the unhappiness of pilots, flight attendants and much of senior management; and Jayne Hrdlicka, devastated by the loss of her husband and exhausted that the airline’s float had lurched out of reach for 2024.
The appointment of Hrdlicka to run Virgin was controversial from the get-go. When Bain swooped in to try and grab the failed airline from the administrators in 2020, it told staff it supported then-boss Paul Scurrah in order to get their votes for the deal.
It was a brutal bait-and-switch. Bain quickly showed Scurrah the door after seizing control and appointed the woman who had started her career working for them before becoming boss of the Qantas low-cost unit Jetstar.
But running an airline – as opposed to a unit of one – is a “people job”, not just a numbers game. And Hrdlicka, for all her brilliance and understanding of aviation, is lacking in that department. She had done a remarkable job in pulling the nation’s second-biggest airline back from the brink, with Bain as her master and staff initially on board for the rejuvenation of the airline co-founded by Richard Branson that used to be known as a fun place to work.
But the fun never returned under Hrdlicka.
Virgin is entering enterprise bargaining (EBA) negotiations with pilots ahead of their current arrangement expiring mid-year, and they are openly furious at their Kansas-born boss.
Hrdlicka had recently taken to seeing off Virgin passengers when she was travelling on the same flight, something that confused many, according to one captain.
“None of them even knew who she was,” said the pilot in a conversation had not long before the CEO’s departure was announced. “She would have been better off talking to us or the flight attendants, but she didn’t bother doing that.”
A former Virgin board member said he had just been on a flight where he was sure the captain had “decided to ‘tech the plane’ so he announced ‘we’ve got to swap planes,’ just because he could. This is the reverse of the culture you want in a challenger airline”.
Meanwhile, Virgin cabin crew had been vowing to strike, but reached a sudden agreement with the Transport Workers Union and the Flight Attendant’s Association of Australia, in deal that opened to voting this week.
As a cutthroat private equity player, Virgin’s owner Bain is only too aware that staff unhappiness would be contributing to what’s believed to be a near record blowout in the difference in yield between Qantas and Virgin.
“You’ve got that disgruntlement edge which really starts to stuff with your cost base because your on-time performance and utilisation goes out the window, your maintenance schedule is blown, it’s all the stuff at the edges that really starts to eat away,” said the former board member who did not want to be named.
Virgin Australia’s on-time performance has been disastrous for the past four months or more. The latest Australian Competition and Consumer Commission report into aviation showed its lowest on-time arrival rate was in December, of only 54 per cent.
Hrdlicka is understood to have had several clashes with Bain Hong Kong partner Barnaby Lyons in particular as performance indicators have flagged.
All the while, the non-people person Hrdlicka has been grappling with two issues outside her control.
Last year, her husband tragically passed away after a long-term illness.
And in the midst of that, the mooted $3bn float of Virgin – the very reason so many of her senior staff had agreed to take jobs at the airline in the first place and then work themselves to the bone – disappeared.
Hrdlicka had worked wonders to turn Virgin its first profit in a decade, but global capital markets virtually shut down in 2023 and initial public offerings all but disappeared. The market is yet to return and now the airline is unlikely to return to the Australian Securities Exchange even in 2024.
This will be Hrdlicka’s second time leaving a CEO role with a slightly unhappy taste. The first being A2 Milk, which she joined after leaving Jetstar and quickly left during a dysfunctional time which appeared not of her doing.
Her departure now buys Bain time to find a new boss to take Virgin back to the public markets with assurances the new CEO will be in for the long haul. It’s understood that Bain has not yet approached anyone about the role.
Among the list of people Bain is likely to approach to test their interest is former Qantas domestic CEO Andrew David, who was believed to have fallen out with then-CEO Alan Joyce; and former Qantas loyalty CEO Olivia Wirth, who lost out to Vanessa Hudson in the battle to run the Flying Kangaroo. Also likely to be considered is Greg Foran, who has been running Air New Zealand since 2020.
What’s clear is that Bain has likely learned a lesson that there is more to running an airline than just being the smartest person in the room.
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