Bain of Jayne Hrdlicka’s life; Peter V’landys chips in over food at footy

Jayne Hrdlicka says she is nowhere near finished in ‘taking costs out’ at Virgin Australia. Picture: Lyndon Mechielsen.

Rescued airline Virgin Australia made a bottom-line loss of $567.9m in the 2022 financial year, a result that Jayne Hrdlicka tried to pretty-up by blaming on the pandemic. She said it was a “good result in the context of the last year”.

But hobbled or not, the carrier’s private equity owners appear determined to continue extracting their pound of financial flesh.

Deep in the weeds of Virgin’s financial accounts, lodged on Wednesday with the corporate regulator, are details of a sweet arrangement that Bain Capital has struck with the group.

The private equity giant bought Virgin out of voluntary administration in late 2020 and wants to refloat the airline on the ASX as early as next year.

The accounts note that Bain has an ongoing agreement to provide the carrier with “management and other consulting services”, which include a fixed annual fee and expenses that tally to several million dollars a month.

Fees under this agreement were paid in FY22 and likely FY21 to Bain but the amounts were not broken out in the past two years of accounts.

During the first financial year of its ownership, Bain was also paid $37.6m in transaction costs it had incurred from its purchase of the airline. So the investee company effectively paid Bain’s deal costs.

Outgoings to Bain are slated to continue in the event of an IPO, including a “termination fee” of unknown magnitude that Bain is entitled to receive, per its agreement.

All of which stands to further hobble an airline desperately trying to cut the remaining fat from its operations, or so says Hrdlicka.

“We’re nowhere near finished in taking costs out of the business,” the CEO said. “We know we’ve got to continue to take costs out because inflation is coming at us faster than we can bail the water out.”

Need we point out the CEO’s ongoing addiction to throwing money at consultants? Notwithstanding her love of Bain & Company, where she used to work – and which also consults for Virgin – Margin Call understands the airline has recruited Newgate Communications’ partner Pete McConnell to temporarily run its corporate communications division.

McConnell, formerly a chief of staff to NSW premier Barry O’Farrell, is understood to be a stopgap appointment until Woolworths executive Christian Bennett starts in the role.

Meanwhile, Virgin’s management is being well looked after despite the pandemic’s impact. About 53 million A-class ordinary shares have been issued to executives since Virgin’s exit from voluntary administration, the accounts reveal.

Some 42.2 million shares were issued in FY21 at a cost of $16.5m, while 10.8 million shares were issued more recently at a cost of $3m. The reduced issuance reflects fewer new recruits to the group, although there is likely to be much upside for management in the event of a float.

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A question of quality

Hot chips are said to be a beloved staple of Peter V’landys’ diet, so much so that earlier this year the NRL chairman told the Financial Review he “eats chips by the bucketload” and has no interest in what he describes as “a la carte cuisine”.

Fries or no fries, V’landys is still quite finicky about the grub that’s on offer at some football matches. That’s what the humble food and beverage staff learned over the weekend at Sydney’s newly christened Allianz Stadium, where Justin Hemmes’ Merivale empire has thankfully taken over the hospitality from some truly substandard catering.

According to Margin Call’s correspondence, something was most certainly not all right during the start of the finals series, with V’landys seen in animated discussion with Merivale catering staff during the Rabbitohs v Roosters elimination final.

Fans deserve quality food at the footy as much as those in the boxes. Picture: Mark Kolbe/Getty Images

Those in the room say V’landys was deeply unhappy with a particular offering on the antipasti plates in the corporate suite, prompting one of the help to offer an apology, although it’s not clear whether this was made directly to him or to a lieutenant.

V’landys and Hemmes, for the record, appear to enjoy a healthy relationship, sitting mere metres apart at a function only days earlier – catered by Merivale – at Allianz.

Suffice it to say the NRL confirmed something had been afoot, with a spokesman explaining that “guest complaints were received regarding the food and feedback was passed onto the catering company by NRL staff members”. V’landys, the NRL spokesman confirmed, stayed hands off from the complaint.

Between running the NRL and gearing up for the annual Everest Carnival in October – put on by Racing NSW, where he is chief executive – it’s surprising that V’landys even has the time to keep his eye on the game’s hospitality. Even if, as he told the Financial Review, “I’m just a meat pie and chips (person).”