Virgin Australia: Paul out, Jayne in, Bain Capital’s behaviour is what gives capitalism a bad name
Well, ain’t life interesting.
First, it was going to be ‘steady as she goes’ – the same strategy with a lower cost base for the airline, and now it sounds like ‘screw the flight attendants’, ‘screw the pilots’, remove all frills, catering and relationship with workers to make money to sell the airline, and so mightily reinforce the bad name of private equity.
‘Bain is seemingly oblivious to the damage this massive con will wreak on the already piss-poor reputation of PE in the Australian community.’Joe Aston, Rear Window, Australian Financial Review
Bain Capital MD, Mike Murphy has now renegued on virtually every undertaking about management and direction for the re-born Virgin Australia. Now that Scurrah has left, and ex Qantas/Jetstar/A2 Milk/Bain alumni Jayne Hrdlicka is in the CEO seat, all previous bets on the direction Virgin Australia are now off.
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So how did we get here with Virgin Australia?
Capitalists seem to lie – through their teeth as standard practice.
‘Virgin’s 6000 remaining employees will now quite reasonably comprehend they’ve been annexed by a pack of scumbags whose undertakings are worthless. Hrdlicka will run Virgin as she did Jetstar and the a2 Milk Company: without an ounce of human feeling.’Joe Aston, Rear Window, Australian Financial Review
Throughout the bidding process for Virgin Australia, Bain confirmed that Paul Scurrah would remain as CEO and that the re-born Virgin Australia would maintain the maximum number of employees it could. That it would compete directly with Qantas, that Bain was in it for the long-haul, and that Virgin Australia would compete as a full service airline, but with a cheaper cost profile. That’s why the unions backed their offer over others, partly based on the assurances that Scurrah would stay, and Jane Hrdlicka would at most occupy a board seat.
Those assurances seem to be worth less than the paper they were written on.
Scurrah left: “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,” according to his statement, but in the AFR it is reported that he left because:
”Bain had forced Mr Scurrah out over conflicts regarding the size of Virgin’s international network and the number of higher-end passenger offerings, such as lounges, it would retain.Lucas Baird and Mark Ludlow, AFR
So what will happen now . . .
The AFR has also reported recently that other members of Scurrah’s leadership team have slowly walked, diminishing the executive group that has soldiered on through the administration period.
Jayne Hrdlicka, will presumably surround herself with her own preferred low-cost team to return the airline to profit for a quick sale before competitors like Rex and Alliance Airlines get any kind of hold on the capital city domestic market as it recovers in line with state border openings.
Well, I did predict this would happen soon, and it looks like they left it until the beginning of 2023 to make the announcements.
We don’t know where Hrdlicka will take the airline, other than the already talked about ‘hybrid’ model that would offer competitive prices and a distinctive Virgin experience that would appeal to the full spectrum of travellers including premium and budget.
All things to all people?
I was contemplating a more egalitarian attitude to domestic carriers for my own flying choices, instead of my rusted on Qantas patronage. But if Virgin pursues a course that involves devalued partnerships, reduced catering, and downgraded and a reduced num ber of lounges, then I will need to think again.
I might just have to book a flight come 1st November, just to see how the by then Bain owned airline is fending.