VIRGIN AUSTRALIA: CEO Jayne Hrdlicka to go – IPO further delayed!

After four years at the top Virgin Australia’s chief executive Jayne Hrdlicka is leaving the airline. That almost certainly will delay the companies’ relisting on the Australian Stock Exchange.

The company’s release is vague on when she will actually step away from the role, although it does use the word ‘now’. In Virgin corporate speak she will ‘transition on from the role as ECO’.

In a letter to staff, she did not specify when or why she is leaving.

What’s going on?

It is hard to fathom this, especially when the why and when have been left vague. Is there more to this than meets the eye? Possibly. Hrdlicka’s departure comes within four months of the executive overseeing the airline’s stock exchange relisting plans, David Marr, quitting. Is there any link between these two events? I don’t know.

The Chairman of Virgin Australia, Ryan Cotton has informed staff via an email on Tuesday that Ms Hrdlicka would remain until a new chief executive could be named. It is understood that the executive search for a replacement is about to get underway.

“I have decided the time is right for me to signal CEO transition for this great airline and ultimately to pass the baton on. This is not a decision I have taken lightly, but the last 4 years have been heavy lifting across the organisation during the toughest of times. We are in the midst of the next phase of our transformation program and there is a lot to do and an IPO to deliver. The next phase of this journey is another 3-5 years, making now the perfect juncture to begin the process of leadership transition to deliver the next few chapters of what I’m sure will be a significant long-term success story.”

Jayne Hrdlicka, Virgin Australia CEO

Who next?

Olivia Wirth, the soon-to-be former chief executive of Qantas Loyalty is leaving Qantas at the end of February. Having only taken a position on the Myer board, she must be a contender to replace Ms Hrdlicka. Ms Wirth lost out to current Qantas CEO Vanessa Hudson.

I believe Alan Joyce – who left Qantas abruptly is also out of a job. Wouldn’t that be a kicker if he came back to Australia to head Virgin Australia?

Background

Jayne Hrdlicka was a shoo-in for a board position when in 2020 Bain Capital won the bid to buy Virgin out of Administration. Back then, promises were made by executives at Bain and others that Paul Scurruh would remain CEO.

But that turned out to be untrue when Jayne Hrdlicka was installed in the position as Bain took the reigns of the company.

Although Hrdlicka has achieved a profit for the airline, her reign at Virgin Australia has not been without issues. She was pilloried by the public for saying that the lockdowns had to stop, even at the cost of people’s lives, so the airline industry could survive. That went down like a lead balloon, and she had to ‘clarify’ and apologise.

2PAXfly Takeout

This is an interesting development, at an interesting time. Virgin scuppered the listing plans after feedback from potential investors, who did not seem convinced that Virgin could see its great post-COVID investment returns persisting. The market is aware of all the headwinds that the airline industry is battling. Everything from shortages and delays in the delivery of aircraft and spare parts, through to pilot and crew shortages that require big investments in training.

It may be that Bain Capital will need to hold on to Virgin Australia much longer than it had hoped, or at least until it can prove through results that it can maintain profit levels, as conditions move closer to pre-COVID-19 trends.

Air NZ has issued a profit warning preceeding its latest results. Qantas is due to issue its interim results this week (Thursday 22 February), so if they show a substantive slowdown in profits or earnings, we will know that times are getting tougher in Australasia for airlines.

If that is the case, then that 3 to 5-year commitment for an IPO, is probably correct, so maybe Hrdlicka is just not willing to make that commitment. She has done well in the airline industry at Qantas, Jetstar and Virgin Australia. Her one foray out of the airline industry at A2 Milk was not so successful. She ended up leaving to spend more time with her family.