17 April 2024
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Virgin boss is flying the coop before it goes public

Peter Switzer
21 February 2024

Virgin Australia must say bon voyage to its CEO American Jayne Hrdlicka, who surprised stock players with her announcement about her exit.
They’re left wondering when the airline will actually re-list and become a public company again.
The current owner is Bain Capital, which bought the airline after the Covid collapse of the company, following the Morrison Government refusing to bail out the airline. Bain has delayed the re-listing, which was slated for some time in 2023, clearly waiting for the perfect time to get investors to part with their money to buy into the airline on the stock market.
While most of 2023 was a tough time for the stock market (as the graph below shows), the last quarter until now has been a good time for share players, and the airline has missed an opportunity to get in while the going is good.

S&P/ASX 200 (one year)

That’s only a 4.4% rise over the past 12 months, though the calendar year gain was close to 9%, so there were opportunities. But for most of 2023, the market was on a slight slide as interest rates rose.
The current Bain thinking would be to wait until interest rates are falling and the chances of a recession are on the low side, which I expect is right, and then take a gamble that the stock market will surge as investors welcome the prospect of lower interest rates. History has shown that lower rates help stock prices and remember, many companies have seen their share prices smashed because they had debt and rising rates had to hit their bottom lines.
Given the fact that Bain Capital turned a nice profit of $129 million for 2022-23, which is the first for 11 years, there can hardly be an argument that Ms Hrdlicka hasn’t done a creditable job.
The CEO who will stay in the job until her replacement is found, redefined the airline as a “value carrier”, stopped competing with Jetstar, which she used to run, and dropped Tigerair. Also, she effectively didn’t take Qantas on for business class travellers, which was a battlefield for Qantas boss Alan Joyce and Virgin’s John Borghetti, which proved costly for both airlines.
Ms Hrdlicka has had the benefit of the post-Covid escalation if airfares and the fact that there isn’t cutthroat competition. But the job of a CEO is to create profit, not cheese off the customer base and even keep workers onside if you can’t make them love you.
And given what the Transport Workers Union’s national secretary said to theguardian.com, she was seen as an easier commodity to deal with compared to Alan Joyce.
“The decision to answer workers’ call with more insourced airport jobs in stark contrast to Qantas’ destructive model of fragmentation was, in our view, one of the best leadership decisions made by Hrdlicka and her team. It showed that listening to workers’ ideas on the best way forward for the airline is a valuable attribute for the CEO of Virgin Australia,” Kaine said.
Hrdlicka has had a nice ride with Virgin, despite post-Covid issues that have unsettled customers, such as very high fares, on-time performance, staffing levels and baggage handling operations.
Ironically, her old colleague at Qantas (where she was once a senior executive), Alan Joyce, and his public fall from grace has helped keep the spotlight off Virgin Australia, permitting her to make the airline relatively attractive when Bain decides to press the button on a re-listing.
All this was achieved by Ms Hrdlicka as she had to nurse her husband in recent years, who tragically passed away last year.
This is what she told her 7,500 staff on Tuesday: “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 four years have been heavy lifting across the organisation during the toughest of times.”
And in a coincidence, this week, a company that Ms Hrdlicka was CEO of for a short time — A2Milk — finally reported well and saw its share price spike by 16% in a day. This wasn’t a great time for this very successful public company executive but if she still holds A2M stock, she might have had reason to pop a bottle of champagne (or a bottle of milk!) this week.
Bon Voyage Jayne Hrdlicka!

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