Virgin Australia will lose stalwart CEO Paul Scurrah, with the popular exec ousted by new airline owner Bain Capital after just 20 months in the job.
Scurrah's exit was confirmed this morning, after weeks of simmering tension surrounding different visions for the airline boiled over.
He will be replaced by Jayne Hrdlicka, a former senior partner with Bain and Jetstar CEO from July 2012 to October 2017, who was part of Bain's successful bid team to take control of Virgin Australia
Scurrah will remain as CEO until Bain assumes full control of Virgin Australia in early November
“Having seen the company through COVID-19, voluntary administration, the sale to Bain Capital and the redesign of the business, I will be stepping down as CEO and Managing Director," Scurrah said.
"I have made this decision after some long discussions with my family. The time feels right, and I know the business will be in good hands."
Bain Capital Managing Director Mike Murphy, saluted Scurrah for providing "the leadership to enable Virgin Australia to emerge from voluntary administration as a well-capitalised, best in classs carrier."
On Hrdlicka's ascension to CEO, Murphy said "the challenges facing all airlines are extraordinary, and Virgin Australia requires a different form of leadership to survive in the long term. Given the environment, we need a hands on CEO with deep aviation, commercial, operational and transformation experience."
"Jayne is the right person to take the business forward under Bain Capital’s ownership. She has extensive airline experience and I know she, alongside Bain Capital, wants nothing more than to see Virgin Australia prosper and thrive well into the future."
Although previously tipped to take on a boardroom role, Hrdlick's recent relocation from Melbourne to Virgin's home base of Brisbane fuelled speculation of a far more hands-on role.
Vaughan Strawbridge, from airline administrator Deloitte, said he had "reaffirmed with Bain Capital that Virgin Australia will not be repositioned as a low-cost carrier."
"Virgin Australia will be a 'hybrid' airline, offering great value to customers by delivering a distinctive Virgin experience at competitive prices. This will appeal to the full spectrum of travellers, from premium corporate through to more budget-focused consumers."
A difference in directions?
Scurrah has continued to champion Virgin's role as full-service albeit 'value' airline in the middle of the market, with a premium business class and airport lounge offering to appeal to business travellers and frequent flyers who would otherwise favour Qantas.
While Bain seemingly embraced this template in its $3.5 billion takeover of Virgin, which collapsed into administration on April 21, the US-based private equity colossus was said to be repositioning the airline with more of a budget skew, while retaining the business class cabin and reportedly some – but not all - lounges.
Executive Traveller understands that one of many recent 'red flags' to Scurrah was Bain's proposal for the new business class catering plan, which was said to reduce food and drinks service to the bare minimum.
When Bain threw its hat into the bidder's ring in May 2020, Murphy said the company's aim was "to bring back the best parts of the Virgin Blue culture and make flying fun again."
The reference to Virgin Blue – Virgin Australia's decidedly low-cost predecessor – immediately spooked many travellers and industry observers, as did Murphy's subsequent media comments on the importance of airport lounges.
"Things like a fancy club and fancy meals and all of that are relevant to a very small portion of customers," he told media in late June. "But for the vast majority of customers, they just don't value that as much. We will work with Paul [Scurrah] and his team to put a finer point on this."
However, Bain continued to endorse the new-look Virgin Australia as a debt-free finesse of VA1. "I think largely the positioning from a customer perspective will be very similar to where it is, but maybe a little more value focused."
Scurrah's flight path
An experienced tourism and transport and logistics executive, Scurrah's pre-Virgin CV included years at both Qantas and Ansett Australia, helping establish Regional Express and holding down leadership roles at Flight Centre, Tourism Queensland and Queensland Rail.
He took over from longstanding Virgin Australia CEO John Borghetti on March 25 2019 and, mindful of Virgin's track record of high debt and ongoing losses, set about in his words "turning a great airline into a great business."
However, barely 13 months later, on April 21 2020, Scurrah was forced to take Virgin into administration as Covid-19 and related travel restrictions robbed the airline of passengers and revenue.
Alongside administrator Deloitte, Scurrah helped guide the collapsed airline through a parade of suitors and eventually into the embrace of US-based Bain Capital, which locked away ownership of Virgin with a $3.5 billion deal largely made up of assuming outstanding debt.
To some extent, Scurrah's turnaround plan for Virgin Australia was accelerated by the "shrink to survive' necessity of Covid-19: he closed the airline's New Zealand base, axed budget arm Tigerair Australia, and moved towards a streamlined fleet primarily consisting of the Boeing 737 workhorse.
With international travel of the agenda until at least 2021, Scurrah also ditched the larger Airbus A330 and Boeing 777 jets, proposing that once overseas routes resumed, they would be flown by newer and more efficient Boeing 787 Dreamliners.