Mission Impossible for new Virgin Australia CEO

October 19, 2020
Virgin australia

Mission impossible is one way to describe the challenge for incoming Virgin Australia chief executive Jayne Hrdlicka.

And if the former Bain Capital analyst and Jetstar chief can pull off the re-invention of Virgin Australia into a hybrid airline, embraced by its 11 million frequent flyers and 6000 staff she will be crowned airline executive of the year.

The challenge of realigning Virgin Australia product while cutting staff remuneration is staggering.

Former Ansett and British Airways chief Sir Rod Eddington once described the challenge facing Ms Hrdlicka of changing airline culture as similar to “performing an engine change in flight.”

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Prior to its administration Virgin Australia staff and its product were being hailed as the world’s best practice and arguably too opulent for the market.

Now the need is to move back to humbler offerings which will not sit well with staff or the airline customers. But how humble?

Bain Capital, which agreed to pay $3.50 billion for Virgin Australia, refutes suggestions that it’s going to take the airline down market saying it’s evolving a hybrid airline with some upmarket frills but evidence abounds to the contrary.

This week’s revelations, from two staff memos, of a paltry 80-cent tub of noodles and a can of coke for business class passengers paying $2500 is about as downmarket as you can get.

While the official line is the airline is “re-imagining what our onboard catering offer will be longer-term, and are looking forward to developing a new experience to suit customer needs” there is no re-imagining about the staff memos which also say the airline has run out of wine and Diet Coke.

The memos also warn that the supply of snacks is about to be exhausted and not to offer any to economy class passengers unless they ask for them.

Virgin Australia cabin staff are so embarrassed by the situation they ae calling in sick.
Those staff memos issued on September 25 and October 8 are more about an airline about to collapse.

Why can’t someone in the airline’s store order some more wine?

The damage being done to the airline is almost irreparable, which begs the question of what is the end game for Bain Capital.

Unions now warn that Bain Capital may be going back on its word to preserve 6000 jobs, passenger lounges and offer multi-tiered classes onboard the aircraft.

Certainly, since those assurances, and others, were given the airline landscape has gone from bad to worse with the Victorian COVID-19 fiasco stifling the opening up of domestic travel, REX entering into the jet market and the hard-international borders being pushed back combining to paint a bleak picture.

Ms Hrdlicka’s mission impossible is to balance staff and union demands with the dire market realities while delivering an in-flight product which is premium enough to retain the loyalty of the airline’s millions of frequent flyers.

Another Mt Everest for Ms Hrdlicka is the love and loyalty staff have the airline’s previous management in Brett Godfrey, John Borghetti and Paul Scurrah.

l:R Qantas Group CEO Alan Joyce with Jayne Hrdlicka onboard Jetstar’s first 787.

According to one seasoned airline watcher, there will be an exodus from Virgin Australia’s management ranks with Ms Hrdlicka’s appointment.

One suggests it will “not be a trickle but more like an emergency evacuation.”

At the same time airline staff and passengers alike have to appreciate that COVID-19 has virtually wiped the industry out with most airlines holding out begging bowls to survive and many collapsing.

Just having a job in the airline or travel industry is a bonus and the good old days are just that. The new normal in airlines is extremely tough with the industry expected to lose $120 billion this calendar year and more next year.

Giant’s like Boeing, Lufthansa and Cathay Pacific Airways are on their knees surviving on government loans.

And nobody knows when the trauma is going to end.