Virgin boss Jayne Hrdlicka signals an airline war is brewing

Jayne Hrdlicka might have one of the toughest corporate gigs in the country: relaunching Virgin Australia, and this time making it work. Oh, and there’s the Australian Open to organise too.

Who is she?

When Hrdlicka left Qantas three years ago, aviation watchers did not think it would be the last they saw of the ambitious 58-year-old executive based in Melbourne.

Born in Kansas, her father a Czechoslovakian Cold War refugee, Hrdlicka studied mathematics and economics at Colorado College and then an MBA at the Tuck School of Business at Dartmouth College in New Hampshire. She landed at the famed management consultancy firm Bain & Co in Boston in 1987.

Virgin Australia CEO Jayne Hrdlicka .
Virgin Australia CEO Jayne Hrdlicka .Credit:Attila Csaszar

Hrdlicka moved to Australia in 1994 following stints at other US corporates and rejoined Bain’s local consulting arm in 1997. Her first client? A young Ansett executive named Alan Joyce.

The pair’s professional relationship continued when Joyce moved to Qantas, and Joyce eventually hired Hrdlicka in 2010 as the Flying Kangaroo’s Group Executive of Strategy and Technology. Two years later she became CEO of Qantas’ budget carrier Jetstar, which was Joyce’s job before he was named Qantas CEO.

Jetstar was an earnings powerhouse and Hrdlicka appeared as a leading contender to replace Joyce as the boss of Australia’s largest airline. But in December 2017, a month after being moved to run its loyalty business, she announced her shock resignation.

It has been speculated Hrdlicka was impatient for her turn at the top. But instead of moving to another airline she jumped to the ASX-listed dairy producer a2 Milk Company.

That CEO gig soured quickly and Hrdlicka departed after just 18 months, citing onerous travel and family commitments. There were reports of a falling out with a2’s board.

Hrdlicka burst back onto the scene this year advising her old employer Bain. Its private equity arm Bain Capital had launched a bid for Virgin Australia after COVID-19 pushed the airline into voluntary administration in April.

Hrdlicka brought a deep knowledge of Australia’s aviation market – specifically Qantas – to the table. She brought some baggage too which threatened to become an Achilles heel for Bain Capital.

Jayne Hrdlicka, Victorian governor Linda Dessau and Vogue editor-in-chief Anna Wintour at the Australian Open in January.
Jayne Hrdlicka, Victorian governor Linda Dessau and Vogue editor-in-chief Anna Wintour at the Australian Open in January. Credit:Jesse Marlow

Unions representing Virgin’s 9000 workers – a key creditor voting block on the takeover deal – already feared the private equity giant would gut Virgin, turn it into a budget airline and sell it for a quick profit. Hrdlicka’s time at Qantas during the 2011 union stand-off and grounding, and her background with the low-cost Jetstar, fortified their concerns.

What does she do?

When Bain Capital won the fierce bidding war for Virgin, it said it would stick with the well-liked CEO Paul Scurrah. He joined Virgin in early 2019 and had set about trying to fix its financial woes.

But Bain dumped Scurrah and put Hrdlicka in charge as soon as it got the keys to Virgin last month.

Virgin appears to have survived the worst of the COVID-19 crisis. But for Hrdlicka the job of rebuilding it into a healthy business competing against her friend and former mentor Joyce at Qantas has only just begun.

Hrdlicka, a tennis enthusiast, is also juggling her responsibilities as chair of Tennis Australia – a title she has held since 2017 – as it goes through its own tribulations organising the Australian Open in the middle of the pandemic. The Gland Slam is set to start on February 8.

What did she do this week?

Hrdlicka hinted at what the post-COVID airline industry will look like, predicting it will have “never have been cheaper to travel in this country”.

The catalyst for a return of the airfare wars is the arrival of a third competitor trying to break-up the Qantas-Virgin duopoly: Regional Express or Rex.

Hrdlicka says Virgin will be back flying around 60 per cent of its pre-COVID domestic capacity in January.
Hrdlicka says Virgin will be back flying around 60 per cent of its pre-COVID domestic capacity in January.Credit:Joe Benke

Rex flies turbo-prop aircraft around remote and regional parts of Australia and is now leasing a small number of Boeing 737s to launch flights between Sydney and Melbourne in March. Brisbane will follow later in the year and Rex wants to have around 10 jets in the sky by the end of 2021.

Hrdlicka says she won’t give up the 30 per cent local market share Virgin had pre-COVID-19. Qantas won’t budge either. The result of the three airlines duking it out, she says, will be some of the cheapest airfares Australians have ever seen.

Why is this important?

Australians are almost uniquely reliant on airlines to get around our vast and sparse country. For a while it looked like Virgin’s collapse could leave us at the mercy of a Qantas monopoly. That’s been averted for now.

But Virgin will be a different airline. It has cut its domestic fleet from around 80 aircraft to 56, offloaded its long-haul jets and shut down the budget carrier Tigerair. A pre-pandemic workforce of 9000 has dwindled to 6000.

Virgin says it is moving a touch further downmarket, keeping business class seats and airport lounges but focusing more on holidaymakers and price-conscious business travellers rather than trying to steal Qantas’ large corporate clients.

There is room to grow, however, as the aviation market recovers from COVID-19. Virgin this week confirmed an order for 25 new Boeing 737 MAX aircraft to be delivered from 2023. (Virgin originally ordered 48 of the jets, which were last month cleared to fly after a 20-month grounding following two fatal crashes).

Hrdlicka this week also poached one of Qantas’ rising stars – its chief operating officer Paul Jones – and appears to be patching things up with Virgin’s unions by promising not to follow Qantas and outsource work to third-party contractors. Most unions support their new enterprise agreements, even though they include wage freezes. And in a sign of goodwill, Hrdlicka herself won’t take a salary until June next year.

Virgin says it will be back flying around 60 per cent of its pre-COVID domestic capacity in January. With a long recovery from the pandemic and a potentially expensive airfare war brewing, the future of Australia’s second airline is in Hrdlicka’s hands.

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