Virgin Australia Group is looking for a new chief executive after current boss John Borghetti has said he plans to step down and will not renew his contract past January 1, 2020.
Virgin said the airline veteran had signaled his desire to depart by this date to give the board ample time to find a replacement and allow for a replacement. Borghetti has made no secret of the fact that his tenure was finite and has talked about stepping down previously.
Borghetti replaced Virgin Australia founder Brett Godfrey as chief executive in May, 2010 and set about reinventing Virgin as a full-service carrier, competing with Qantas for the premium market while acquiring low-cost carrier Tigerair Australia to cover the low-end Australian leisure market.
He came from Qantas where he held a number of senior executive positions after starting his career in the company’s mail room. He was executive general manager of Qantas for six years prior to leaving the airline.
Borghetti's restructure brought a new level of competition to a domestic premium market that had been dominated by Qantas since the demise of the flying kangaroo's long-standing rival, Ansett Australia.
The upgrade, which included an award-winning business class, allowed Virgin to attract lucrative corporate and government passengers and was accompanied by a push to grow the Velocity frequent flyer scheme.
But it was a strain on the airline's resources and Virgin added a series of equity partners during Borghetti’s tenure, with Etihad Airways, Singapore Airlines, HNA Group and Nanshan Group joining original investor Virgin Group to hold more than 90 percent of the airline’s shares.
Air New Zealand, which recently announced it was pulling out of its trans-Tasman alliance with Virgin and joining forces with Qantas, was also an investor but sold most of its stake to Nanshan in 2016.
Read Qantas hops into bed with Air New Zealand.
Borghetti also moved to compensate for Virgin's comparatively small international footprint by striking alliance deals with Singapore Airlines, Etihad and Delta Air Lines.
The group has struggled to turn a profit — partly due to a bruising capacity war with Qantas —even as its competitor returned record results. But it has been significantly improving its balance sheet and its financial performance.
Virgin returned its highest underlying pre-tax profit in a decade, $A102.5m, in its most recent first-half. It edged into the black on in terms of a statutory after-tax profit but not on the basis of net profit attributable to shareholders.
“The board and I are grateful to John for providing a generous period of time for the search for the CEO and an appropriate transition of leadership,’’ Virgin Australia Group chairman Elizabeth Bryan said in a statement to the ASX.
“The board will now commence a global search for a successor while John will remain focused on leading the group.
“I would like to acknowledge John’s enormous contribution to Virgin Australia Group to date and thank him for his continued dedication.’’
Borghetti said it was a privilege to serve as CEO of the airline group.
“By notifying the board of my intentions now, it provides them with the appropriate time to conduct a thorough recruitment process and for me to support the transition.
“In the interim, I look forward to continuing in the role of CEO and I remain focused on delivering the goals of the Virgin Australia Group.’’
Potential internal candidates for the top job include group executive Virgin Australia Airlines Rob Sharp and Tigerair Australia chief executive Merren McArthur.
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