TUMULTUOUS YEAR: Virgin boss steps down

 

Paul Scurrah has resigned as chief executive of Virgin Australia, following a year of turmoil for Australia's second airline.

He will be replaced by former Jetstar boss Jayne Hrdlicka after the sale of the airline to US private equity firm Bain Capital is completed.

The airline's administrator, Deloitte, said it believed Bain would maintain Virgin Australia as a full-service airline, despite speculation it would transform it into a low-cost carrier.

There have been reports of tension between Bain and Mr Scurrah, who wanted to keep Virgin Australia as a full-service operator.

Sources told the Australian Financial Review other executives may follow Mr Scurrah's exit.

The sale of Virgin Australia to Boston-based private equity firm Bain Capital was finalised last month after the debt-ridden airline slumped into voluntary administration in April.

The airline has since announced it would streamline its fleet and axe budget subsidiary Tigerair, but keep its two-class cabin structure - business class and economy - and return business lounges when travel demand picked up.

Virgin Australia CEO Paul Scurrah at the airline’s Brisbane headquarters. Picture: Lyndon Mechielsen
Virgin Australia CEO Paul Scurrah at the airline’s Brisbane headquarters. Picture: Lyndon Mechielsen

 

But Nine newspapers report Bain Capital will renege on its promises and strip Virgin Australia back to a low-cost carrier, which would give full-service rival Qantas a monopoly in Australia.

Company insiders said Bain planned to replace Mr Scurrah with former Jetstar boss and Bain executive Jayne Hrdlicka, who has more experience at the helm of a budget airline.

The ABC reports there has been tension between Bain and Mr Scurrah, who wants Virgin Australia to keep operating as a full-service airline.

Yesterday, Mr Scurrah refused to comment on whether he would be replaced.

"There's been ongoing speculation for some and I've never been in the habit of commenting on speculation," he said.

Unions are concerned about the rumoured exit of Mr Scurrah, who has connections to Queensland Labor. The Transport Workers Union (TWU) has a history of clashing with Ms Hrdlicka, The Australian reports.

 

Tennis Australia president and former Jetstar boss Jayne Hrdlicka is rumoured to be Mr Scurrah’s replacement at Virgin Australia. Picture: Fiona Hamilton/Tennis Australia
Tennis Australia president and former Jetstar boss Jayne Hrdlicka is rumoured to be Mr Scurrah’s replacement at Virgin Australia. Picture: Fiona Hamilton/Tennis Australia

 

The TWU has written to Bain seeking an urgent meeting to discuss Mr Scurrah's future and whether it would uphold its pre-sale promise to keep 6000 workers, tiered cabin classes, airport lounges for business class travellers and the airline's international network.

TWU National Secretary Michael Kaine said the reports of Mr Scurrah's exit were a "serious and worrying development".

"We are suspending negotiations on enterprise agreements while we seek clarification on these developments," he said.

"For our part, we are engaged in talks in good faith. If the plan and scope of the airline as outlined in August by Bain Capital has already been scrapped then this is a serious betrayal that must be addressed," he said.

Rumours of Mr Scurrah being replaced by Ms Hrdlicka emerged after the Courier Mail revealed she was able to skip hotel quarantine after arriving in Brisbane - where Virgin Australia is headquartered - last week.

 

Unions are concerned Bain will renege on promises made in its bid to purchase Virgin Australia. Picture: NCA NewsWire / Christian Gilles
Unions are concerned Bain will renege on promises made in its bid to purchase Virgin Australia. Picture: NCA NewsWire / Christian Gilles

 

The newspaper said US-born Ms Hrdlicka was allowed to quarantine at a luxury Brisbane residence after being granted an exemption from Queensland Health as her husband is undergoing chemotherapy.

The multi-millionaire former Jetstar boss and Tennis Australia president has been a key figure with Bain Capital and was reportedly part of the team that helped secure the firm's purchase of Virgin Australia.

The TWU has also written to Prime Minister Scott Morrison, warning the rumoured changes at Virgin Australia could result in even more job losses in an already devastated workforce.

"We want answers from the Federal Government also on these developments and how it expects to save jobs at Virgin," Mr Scurrah said.

"If confirmed it shows how the Federal Government has stood by and allowed a private equity firm to take over one of Australia's most valuable assets and renege on commitments."

 

Originally published as 'Worrying': Virgin boss' future in doubt


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