The administrators of the Virgin Australia Group (Deloitte) have announced today that Paul Scurrah has resigned as Chief Executive Officer and Managing Director and will depart in early November once the sale of the airline to Bain Capital is finalised.
In a statement to the ASX, Deloitte said Paul Scurrah will remain as CEO and Managing Director until that time, supporting the handover of the business to Bain Capital, which is expected in early November 2020.
Deloitte also confirmed that former Jetstar CEO Jayne Hrdlicka will be appointed as Virgin Australia’s new CEO once the transaction is complete.
Speaking about the decision, Mr Scurrah said “It is the intention that Jayne Hrdlicka will be appointed by Bain Capital as CEO once the transaction is complete, in early November. Jayne has strong aviation credentials. She is very focused on seeing the business succeed and I wish Virgin Australia well under her leadership.”
The announcement is bound to be a controversial one, with rumours of Mr Scurrah’s imminent departure once Bain had bought Virgin Australia circulating long before the initial deal went through.
In recent weeks, private equity company Bain had repeatedly talked up Mr Scurrah’s future prospects with the airline, insisting he would continue as CEO.
It’s believed investment capital company Bain and Mr Scurrah did not agree on Virgin Australia’s proposed V2.0 mid-market approach, with Bain reportedly favouring a more low-cost carrier approach to rival Jetstar.
While this claim only becomes more apparent with the planned appointment of former Jetstar CEO Jayne Hrdlicka, Deloitte denies this is not the case, with administrator Vaughan Strawbridge saying: “Paul has done an outstanding job supporting us through this process. His exceptional leadership enabled us to stabilise the business and achieve a sale in a timely and orderly manner.
“I know there has been speculation about the shape of the airline into the future, and I have 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 customers.”
Meanwhile, the outgoing CEO and MD Mr Scurrah said: “Over the last 18 months, I have had the great privilege of being the CEO and Managing Director of the Virgin Australia Group. Whilst it has been the most challenging time in aviation history, I have continued to be so proud of the way my team and our entire organisation has fought to save this airline and to keep competition alive and well in Australia. We have succeeded in not just ensuring the future of the company, but also reset the business to ensure it is well placed to deliver for Bain Capital for many years to come.
“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 at financial close of the DOCAs. 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.
“I am proud of that work that has been completed to date to transition the business and remove complexity, allowing the airline to compete effectively once demand returns.”
Paul Scurrah, CEO and MD Virgin Australia
“I want to thank all of our team members who have continued to support and work tirelessly to get the company through to this stage. I will forever be proud of what we have done here. It is the people that make this airline the great place it is and I wish them all the best. I was extremely humbled by the warmth with which I was embraced on day one and for the unwavering support afforded to me throughout this ongoing major industry crisis.
“I also want to thank Vaughan Strawbridge and his team at Deloitte as well as our legal and financial advisers for the major achievement and tireless efforts to ensure that Virgin Australia has a future. I won’t forget the support they provided me and the team.
“I have also appreciated working with Bain Capital in recent months and recognise the significant contribution they have made to Virgin Australia’s long-term future. They have demonstrated a deep understanding of aviation and our culture.
Mr Scurrah was in the Virgin Australia hot seat for eighteen turbulent months including eight in COVID-19, and the concern now is that Bain will move forward with a management shakeup and a strategy change could lead to even more job losses.
In a statement released after today’s announcement by Deloitte, the Transport Workers Union (TWU) said “We sincerely hope that the veil of secrecy and background shenanigans on display over the past few days is not repeated. Trust must be at the heart of Bain’s dealings.”
“The TWU’s focus has been on holding Bain Capital to account over the commitments it signed up to before Virgin workers as creditors voted to approve the sale of the airline. We want to see the Federal Government holding the private equity firm to account also.
“The Federal Government has presided over a model of ‘no-strings corporate welfare’ where the pay packets of airline executives are protected but aviation workers, regional Australia and businesses in travel and tourism-dependent on aviation are cut off. This must end.”
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