Virgin Australia CEO Paul Scurrah will step down within weeks once the airline’s sale to US private equity group Bain Capital is completed, the airline’s administrator said.
Jayne Hrdlicka, a former head of the Jetstar budget offshoot of Qantas, will take over the top job at Australia’s second-biggest airline at the financial close of the deal, expected in early November.
Mr Scurrah had clashed with Bain over strategy and wanted to maintain a more premium offering than desired by the US private equity firm, two people with knowledge of the matter told Reuters on condition of anonymity.
Bain still plans to keep Virgin’s lounges and business-class offering, in contrast to suggestions it would become a budget carrier, but is not likely to keep operations at a level desired by Mr Scurrah, one of the people said.
Unions representing Virgin employees are concerned about Mr Scurrah’s exit and potential plans to move the full-service carrier downmarket.
The Australian Services Union on Thursday called on Bain to confirm it’s not seeking to turn Virgin into a low-cost carrier and to honour its promises to Virgin workers.
“The assurance given to 6,000 Virgin employees that their jobs would be safe, was based on commitments made by Bain during the sale process to remain a full-service airline,” it said
“If Bain starts to unwind these commitments and move towards a model of a low-cost carrier, this raises very significant concerns about job security for Virgin workers.”
The ASU is seeking a meeting with Bain.
The airline fell into voluntary administration owing nearly $7 billion in April.
It was later bought by Bain and staff were told at the time it would remain a full-service competitor to Qantas.
Mr Scurrah, who took over from long-serving boss John Borghetti in March 2019, is highly regarded by staff despite having announced plans to cut one-third of the workforce due to the coronavirus pandemic.
“He delivers good news and bad in clear terms. There is no lip service,” Steve Purvinas, federal secretary of the Australian Licensed Aircraft Engineers’ Association, said.
“He has the full support of our association.”