John Borghetti resigns from Virgin Australia

By David Flynn, June 12 2018
John Borghetti resigns from Virgin Australia

Virgin Australia CEO John Borghetti has announced that he will step down from the role in 2020.

In an announcement posted to the ASX, the airline said that Borghetti "has advised the Board that he will not renew his contract post 1 January 2020."

"Mr Borghetti has signalled his desire to depart by this date to enable the Group ample time to recruit an incoming CEO and allow for an appropriate transition."

After eight years helming the airline, Borghetti remarked it has been "a privilege to serve as CEO of the Virgin Australia Group and to lead a wonderful team of 10 000 people. By notifying the board of my intentions now, it provides them with appropriate time to conduct a thorough recruitment process and for me to support the transition."

“In the interim, I look forward to continuing in the role of CEO and I remain focused on delivering the goals of the Virgin Australia Group,” he added.

A 45 year veteran of the aviation industry, Borghetti – the son of working class Italian immigrants to Australia – famously started his career in the Qantas mailroom in 1973, aged 17 years.

He delights in recounting how he first set his eyes on a job with Qantas: sitting in a theatre with his best schoolmate to see the James Bond film Live and Let Die, the 007 flick was preceded by a featurette showing the Mardi Gras in Rio de Janeiro "showing all these beautiful, half-naked women," Borghetti has often recalled.

Borghetti and his friend quickly agreed they needed to get to Rio – but how? Working for an airline would be the means to a cheap ticket to Brazil.

Over the next 35 years the driven and hard-working Borghetti had climbed Qantas' corporate ladder one rung at a time from mailboy to sales rep to Executive General Manager – where he assumed responsibility for the airline's debut of the Airbus A380 and the creation of its award-winning first class lounges and invitation-only Chairman's Lounge.

But in July 2008 he lost out on the prized role of Qantas CEO to then-Jetstar chief Alan Joyce.

Borghetti resigned early the following year, and in May 2010 took the helm at Virgin Blue, embarking on transformation to turn the decidedly low-cost airline into a Qantas competitor with a broader customer base than just the bottom end of the leisure market.

With the airline quickly rebadged as Virgin Australia, Borghetti oversaw the launch of domestic and later trans-Tasman business class, upgraded its east-west Airbus A330 business class seats – a move which arguably spurred Qantas to its launch its Airbus A330 Business Suite product – developed a lounge network including the invitation-only The Club, and relaunched the Velocity frequent flyer program to sharpen its edge against the powerhouse Qantas loyalty program.

In more recent times Borghetti saw the airline's US-bound Boeing 777 fleet upgraded with what's now regarded as the best business class on the trans-Pacific route and pushed for expansion into Asia with flights from Melbourne and Sydney to Hong Kong.

A famously well-dressed workaholic and car enthusiast, Borghetti can at least look forward to spending some time tinkering with and driving a few favourites from his Porsche-heavy collection cars, although he's expected to take on a number of boardroom director roles post-2020.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Virgin Australia - Velocity Rewards

06 Feb 2012

Total posts 31

It was time.

new horse new race!

Qantas - Qantas Frequent Flyer

12 Jun 2011

Total posts 149

AKA slowly wheeled out...

04 Jan 2018

Total posts 4

Well overdue. Bring on new leadership.

04 May 2015

Total posts 263

John Borghetti started out well, but in recent years has lacked any real direction for the airline. Its alliance partnerships are even more haphazard than before, its product offering in economy is uncompetitive (when Qantas serves dinner, Virgin gives you some crackers, and if your flight departs after 7pm, you'll be paying for soft drink, let alone a glass of wine), its frequent flyer program is also now uncompetitive (many more flights needed to get gold or platinum compared to Qantas due to the crappy earn rates on getaway fares, which most travellers book), there are a million rules to follow for international lounge access depending on which airline you fly, where you're going to, which airport you're in and so on: and much of the time there's no lounge you can use at all... the reasons to choose Virgin over Qantas these days are slim, so hopefully a new CEO can transform the airline into something that actually works for travellers!

(Oh yeah, and remember when Virgin spent millions building a new premium entry thing in Brisbane, and then decided to close it for most of the day so that people couldn't actually use it? That was under John's leadership, too...)

31 Mar 2014

Total posts 338

Ultimately I see this as the best for Virgin. While they have transformed considerably since Virgin Blue days, things seemed to have stagnated recently and never able to match the product offering of Qantas on things like food/beverages.

Virgin Australia - Velocity Rewards

20 Jan 2016

Total posts 61

Not caring for the kick Borghetti take by many. Under his stewardship Virgin has transformed to a decent competitor to Qantas, that has kept fair competition in the Aus market. Virgin is far from perfect, Like any corporate entity of course, change is good thing and is does feel like VA needs fresh thinking, but Aus flyers have a lot to thank John Borghetti for his stewardship of the company.

Qantas - Qantas Frequent Flyer

25 Feb 2017

Total posts 7

Bravo to this comment. Kicking JB in the guts seems to be a fun pastime of many on these & other aviation forums. VA has made its fair share of missteps along its journey, and constructive criticism of these is understandable. But the acerbic nature of comments directed at its CEO continues to baffle me.

As a frequent business traveller on both QF and VA I'm glad there is strong domestic competition in Australia from two fantastic airlines....long may it continue.

Qantas - Qantas Frequent Flyer

12 Jun 2011

Total posts 149

Under his 'leadership', Virgin also went from being profitable under the DJ brand to only turning a profit for *one* full year since 2010. (Return to share holders -55% compared to QF +35% in the same period).


If anything, he has placed VA in a precarious position where it finds it difficult to compete effectively against a more competitive and leaner Qantas.At the same time, VA takes the opportunity to light cash on fire any opportunity. In my opinion, had we stuck to a profitable Virgin Blue with a lower cost base, that would have ensured there be proper competition in the sector.

As CEO he turned Virgin Blue into Qantas lite (both in terms of product and profit) but for the same price.

Qantas - Qantas Frequent Flyer

07 Aug 2013

Total posts 189

Remember when Joyce grounded qantas and was head of the company at a time they lost billions? Both have been served a fair share. Takes money to make money and time to turn an airline. I won’t go into comparing details about product and service - each to their own.

03 Oct 2017

Total posts 1

If you had done a small amount of googling you would have realised that the $2 billion loss in 2014 was not a cash loss like Virign. Also I would rather miss a flight than risk my life.

Virgin Australia - Velocity Rewards

12 Jun 2018

Total posts 2

@mcglymp is 100% right. bravo.

and thank you John for giving flyers a real alternative

Qantas - Qantas Frequent Flyer

09 May 2011

Total posts 354

About time. Bye John.

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 251

While JB has done much for VA in his first few years, his last few years has very much been stagnant in addition to ticking off NZ for numerous reasons.


This could only be a good thing for VA, however the damage has been done in regards to the relationship with NZ (and some of the other Star carriers) for that matter.

Best he could do is at least deepen the relationship with the remaining partner carriers and perhaps even change his mind & follow his preference of "joining SkyTeam" with long time DL prior to leaving in 2020.

Qantas - Qantas Frequent Flyer

20 May 2013

Total posts 17

New blood is definitely required at VA.


As written in the SMH:
"Virgin's total rate of return to shareholders - including dividends and share-price gains - during Mr Borghetti's tenure sits at -55 per cent. That compares to +35 per cent for the ASX200 and +140 per cent at rival Qantas."

QF

11 Jul 2014

Total posts 505

I always like reading the arm chair critic comments, maybe we just look at why people like myself know fly Virgin rather then Qantas and how Qantas staff offer incentives to try and get us people back. Those 2000 plus staus credits a year are alot of bucks and flying time.

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 272

UpUpandAway, not a lot of skill required to pick up overflow in a virtual duopoly, even less to fail to make a profit from that overflow, not many business analysts will see JB leaving as a negative, the business is a dud, it doesn’t make money and things need to change.

QF

11 Jul 2014

Total posts 505

I would interested to see the percentage of Qantas domestic vs Ansett Domestic compared to Qantas Domestic to Virgin Domestic. Also your forgetting the most important thing the consumer and did the owners want the Virgin profits in Australia or in thier own bank accounts?

12 Aug 2017

Total posts 77

Well said! How many armchair critics on here have run airlines?

I think his career has been amazing. Well done to him, and with the recent politics, what a professional thing to have decided to leave now. Companies evolve and VA has transformed under his watch. Now someone else can take over for the next step.
I hope he enjoys his cars.

13 Sep 2016

Total posts 184

I think that if JB had not turned Virgin Blue into Virgin Australia and left it relying on leisure travellers the airline might not be around at all these days and certainly we would not have seen a lot of the changes from Qantas which came about as a result of Virgin bringing some competition back to the field. Maybe he did try to make Virgin into 'Qantas Lite' but I think that was for the better. The problem was that this massive turnaround took a lot more money than the airline had and the senseless 'capacity war' between Qantas and Virgin didn't help.

I think a new CEO will have a 'clean sheet' approach and pretty much a mandate to get things in order. I'd still like to see Virgin privatised with Singapore Airlines as the main owner, with Virgin joining Star Alliance and with SQ getting 'fifth freedom' rights between Australia and the USA, maybe this could be a condition of their support for VA and if they don't get it from the Govt then SQ walks away and there is the strong chance of VA collapsing, that might be a good bargaining chip for SQ.

Qantas - Qantas Frequent Flyer

04 Nov 2017

Total posts 251

Problem is that UA (who is not best friends with SQ) and NZ (allegedly wanted VA to revert to a domestic-only carrier at the time of the Luxon-Borghetti stoush) will use their veto to block VA's entry into *A.
 
DL may also want to bid on a stake in VA at some point in the future
 
Also the existing carriers on the route, QF, UA, DL and even VA themselves would oppose a fourth or fifth competitor on the Trans-Pacific route. Not to mention the one-stop carriers on the lower price end (FJ, HA, NZ, etc).

Qantas - Qantas Frequent Flyer

09 May 2011

Total posts 354

Why do you think SQ has any interest in AU-US flights?

12 Feb 2015

Total posts 89

aklrunway because SQ spent years campaigning to have the Australian Government allow them to fly from Australia to the US.

07 Oct 2012

Total posts 1259

They did... but nowadays, there are multiple carriers between Australia & US/North America. It may not be the super profits cash cow it once was.

Took two virgin flights over the weekend, one A330 + B737. Like entering two different worlds, the B737 world is a not a very comfortable place, fresh approach needed asap, hopefully a new ceo will have fresh ideas, (but home safe and sound which i guess is the main thing).

04 May 2018

Total posts 30

The 738 experience on QF is not that great either comparee to the A330

Qantas - Qantas Frequent Flyer

21 Jan 2014

Total posts 272

2020? I was so excited when I read the headline but then saw the 2020 date, nothing for shareholders to get excited about here, asleep at the wheel for another 2 years, the board should sack him, insert an interim CEO then source a decent replacement to drive this business.

25 Feb 2013

Total posts 62

That's one way for VA to try and get NZ back that I wasn't expecting!

21 Sep 2011

Total posts 65

He needs to go now, not in another 18 months. They are going to waste another 18 months while new direction would have been implemented by the new CEO.

It seems poor John is the subject of much criticism over happenings in the last few years. PLEASE, give the bloke a break. He is CEO of a company that has many masters (shareholders) that compete fiercely and have only their own interests at heart. I reckon, all in all, he has done a terrific job in a very difficult industry. Thats not to say I think all is well but being realistic, things are not too bad.

17 Sep 2015

Total posts 391

readosunnycoast, a pretty fair comment.


The airline hasn't made any money, but if one looks at the whole of AJ's tenure at QF there have been some poor years as well. The latter doesn't have bickering shareholders.

08 Feb 2018

Total posts 97

Most commentators on here seem to think his performance is either an A or an F, but I think a solid B is about right.


Virgin is much improved from when he took over. Their service for economy passengers has improved where QF is going backwards, and for business its so much better than it was. Sure they have their challenges with a super competitive environment and their strategy hasn't quite worked as well as they might have hoped, but I think hes done a reasonable job overall.

16 Jan 2018

Total posts 103

I smell Star or Skyteam on the horizon... 2021 perhaps?

11 Jan 2017

Total posts 6

How many airlines have joined one of the big 3 alliances in the last 3 years.

I’ll save you time, zero.

Bespoke deals is what’s it about now.

The alliances have reached their peak usefulness. Current situation is: no use joining, but no use leaving (yet) either.


12 Jun 2018

Total posts 4

FIJI, Juneyao and Olympic technically.


And you conveniently said 3 years, increase that to 4 and you have Air India, Sri Lankan, Latam and Garuda.

Alliances aren't as dead as you think.

Qantas - Qantas Frequent Flyer

02 Jul 2011

Total posts 1390

Given both Joyce and Borghetti took the top job at the same time they are fairly easy to compare in performance.


Based on share price and financial performance alone, it's a clear win to Joyce.

From the start I thought Borghetti had the easier job - take a low cost airline upmarket (vav taking costs out of an already full service carrier).

While Virgin has moved upmarket in my mind it hasn't completed the job - 737 catering and the aborted lounge rollout cases in point. Then the faltering international network and ever changing lounge rules, the Embraer decision and the NZ partnership are other big negatives over the last few years.

On the plus side the 777/330 hard and soft product is great and the Velocity program remains better than Qantas in my view.

THR
THR

20 Sep 2012

Total posts 68

Godfrey ordered the Embraer, not JB.


I also don't think anyone would describe what JB tried to achieve (unsuccessfully: time will be a better determinant) as 'easier' by any means.

Virgin has both a solid and shaky platform to build on.

Rav
Rav

18 Aug 2017

Total posts 40

"Embraer decision" can some one give me 2 lines about this please

Qantas - Qantas Frequent Flyer

28 Jul 2016

Total posts 109

Finally! About time!

Virgin Australia - Velocity Rewards

13 Nov 2015

Total posts 10

I don't have shares in VA (or QF) so their performance on the ASX means nothing to me. I was elated to see VA go from a LCC to a full-service carrier, and provide real competition to QF.

We are ridiculously spoiled in Australia with two excellent airlines. I moved from the UK back to Australia just as VA started its transformation, and was chuffed with the progress.

I used the VA Premium entry at SYD, straight through to the Lounge, and used the Premium Boarding lane. It's a great reminder of how far the airline has come since its DJ days.

VA shook things up - look at the hard product on their A330 and 777. There is no way QF would have rolled out their suites without JB's intervention in the market.

VA is not a perfect airline, but we've got two bloody good airlines as a consequence, and I'll take that over just one full-service carrier in the country.

24 Oct 2010

Total posts 2421

Good to read some fair and balanced and thoughtful comments and criticism here, reflecting on both the positives and negatives of 'the Borghetti era'.


My own 2c, and this is a personal view (not an AusBT stance) is that John has done a great job in giving Australian travellers a solid alternative to Qantas, and even the Roo's rusted-on passengers have experienced the benefits of that competition.

The business decisions John had to make were probably never easy – if they were, anybody could have done the job – and I'm sure there were things he'd like to have seen head in a different direction. Now it's approaching time for him to to throttle back (motoring analogy deliberate!) and see new leadership take Virgin Australia into a new decade.

17 Sep 2015

Total posts 391

Fair enough, but in other sectors investors expect companies to (overall) make money.


VA hasn't. How can it have a future if it either continues to make losses or earns returns below the cost of capital?

Virgin Australia - Velocity Rewards

07 Dec 2015

Total posts 46

It is pretty clear not many on here have travelled in the US or Europe domestically of late. You want see average, I challenge you to spend a month schlepping around the US on any of the US3!


It makes you realise how seriously spoilt we are in this little country when it comes to airlines.

23 Oct 2014

Total posts 186

Most companies would spread this major transformation / capital outlay over an extended duration (decades) to judge one upstart against the parameters of an established bedded in dominate opposition in all sense of the businesses, that has spread this setup over decades is inappropriate and unfair. If Virgin started with 100% of the market they too would have fantastic fin results. All travellers have benefited from Virgins push upmarket. The service domestic in Australia is fantastic.

29 Mar 2014

Total posts 81

I say it's the right time. He's had his time and did lots of great things, but the airline is now a mess with no new aircraft on order and the two other big Oceania airlines teamed up against them.

AJW
AJW

16 Nov 2011

Total posts 581

No aircraft in order? What happened to the 737MAX order? Delayed to 2019 is all that has happened.


That said from a passenger view point there probably won’t be much difference between a 10 year old 738 and a new MAX8.

Joe
Joe

03 May 2013

Total posts 521

Back to Virgin Blue I say. If he wanted to compete with QF he should have equalled or bettered what QF was doing-he didn't. You can't compete offering a lesser product. Given he's done an amazing job forcing Qantas to up its game, but with too many chefs in the virgin kitchen JB's hand were always semi-tied. I'm also sure there was a teeny bit of vengeance in his mo which may have influenced some poor decisions too.

Qantas - Qantas Frequent Flyer

23 Feb 2016

Total posts 47

Whilst there are a number of air chair CEOs out there, I wonder what may have been different if things had been reversed 8-9 years ago i.e. JB got the top job at QF and AJ took on the VA CEO role. JB got the LCC and transformed it, AJ got 70+ years of history, OW alliance, the national carrier and a carrier that had dominance since the demise of AN.


I think JB has done a lot for the airline industry spending 40 odd years of his life contributing to it in AU and is also recognised on the global stage. Sure VA is still struggling but it is a capital intensive and cost competitive industry. I actually think the next CEO of VA will have a harder challenge as who ever that is will be expected to take VA to the next level.

This certainly didn't go the way JB had planned. When he hired John Thomas to be the CEO of 'Virgin Australia Airlines' the plan was for JT to make his mark on VA and then take over when JB stepped aside, but the melt-down which saw JT turfed out has left the airline without any obvious internal successor except for Merren McArthur who is pretty well regarded as an exec but she will be up against a global search, maybe James Hogan will even toss his hat in to the ring!

12 Jun 2018

Total posts 4

God help us if Hogan is chosen, hopefully someone completely unknown to most of us comes in. Virgin needs it.

Virgin Australia - Velocity Rewards

17 Nov 2017

Total posts 8

James hogan would be great but look at all the airlines that have gone belly up with his deals.

Joe
Joe

03 May 2013

Total posts 521

I wonder if JH has Ansett, Gulf Air and Etihad as professional referees on his resume? ;)

Virgin Australia - Velocity Rewards

17 Aug 2017

Total posts 23

I think he has done a good job but new blood is needed now.

Qantas domestically beats Virgin hands down. Like someone said meal on Qantas, crackers on Virgin.
Virgin need to do what qantas done with Jetstar. Virgin premium, Tiger low cost. Interesting to see what will happen Internationally. Hopefully SQ is involved.

Qantas - Qantas Frequent Flyer

23 Jun 2014

Total posts 36

Great job John, massive difference from the Virgin Blue to the virgin today. Many great improvements, lounges, getting a drink of water on the plane was a great leap forward. Qantas domestic sets a high bar when compared to US and other places.

20 Sep 2017

Total posts 26

I definitely think Qantas have the edge on Virgin Australia at the moment. I hope some new blood will revitalise VA to give Qantas some better competition. I find Qantas to be a lot more flexible than VA in their approach to customer service (particularly for frequent fliers). For example, Qantas will do a status match whereas Velocity will not.

Virgin Australia - Velocity Rewards

06 Mar 2015

Total posts 168

David.

Do you think your Story Headline that John Borghetti " Resigns " is quite correct? Is he simply not renewing his contract which may not be actually resigning per se ?

Joe
Joe

03 May 2013

Total posts 521

What is it with some on here accusing people of being "armchair CEO's?" Clearly we all fly a lot and have at least a semi valid view point/opinion. It's a FORUM and opinion is what it's all about and also what makes ABT's wheels turn. Relax and let people comment.

Rav
Rav

18 Aug 2017

Total posts 40

How soon before AJ does the same and moves on to give QF a refresh.

Qantas

19 Apr 2012

Total posts 1041

AJ will move on after the 100th anniversary, certainly not before so I would say 2021.

Qantas - Qantas Frequent Flyer

18 Jul 2015

Total posts 24

As a "non-business" but regular traveler in premium seats status sharing was good but with cancelled flghts etc etc etc moved to QF. Would be happy to return to VA IFF they can get their act together ----- SOON!


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