Executive hunting season: Qantas, Woolworths and Virgin snared

Now you see them, now you don’t.

The rapid-fire announcements that three of the country’s most high-profile corporate leaders – Woolworths boss Brad Banducci, Virgin Australia chief Jayne Hrdlicka and Qantas chair Richard Goyder – are about to be replaced says a lot about the companies they helmed and the industries they inhabit.

Woolworths CEO Brad Banducci with his successor Amanda Bardwell, who will take over in September.
Woolworths CEO Brad Banducci with his successor Amanda Bardwell, who will take over in September.

It feels like corporate hunting season. And there are no two industries that are more forensically studied and systematically belted than the nation’s airlines and supermarkets.

It was telling that in Banducci’s opening remarks explaining his resignation on Wednesday, he admitted he “hadn’t managed to dodge all the bullets” liberally sprayed in his direction.

Supermarkets have become a political football during the cost of living crisis. Both sides of politics have been engaged in one-upmanship on landing punches.

Prime Minister Anthony Albanese has accused supermarkets of price gouging – sacrificing their customers’ well-being at the altar of profits.

Opposition Leader Peter Dutton followed with the bizarre accusation that Woolworths had engaged in corporate virtue signalling by dropping the poor-selling Australia Day paraphernalia from its shelves.

If this barrage of bullets wasn’t enough to injure the supermarket executives, Banducci sustained self-inflicted wounds during the filming of this week’s ABC Four Corners program.

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Banducci stormed out of an interview for the program having made a remark about former Competition and Consumer Commission chair Rod Sims which he clearly regretted, but which the interviewer refused to consign to the cutting room floor.

Tempting as it is to suggest Banducci’s departure is a direct result of his inability to take control of the narrative, it probably isn’t the main reason, or even a significant part of the reason.

The Woolworths chairman’s explanation that Banducci and the board had been talking about succession for more than six months and the supermarket giant began screening candidates late last year is plausible.

That said, the precise timing of the announcement of Banducci’s departure and the appointment of his successor Amanda Bardwell does feel like it has got corporate communications fingerprints all over it. If it looks like the government has won a scalp, it could dilute Canberra’s regulatory invective – every little bit helps.

That said, it does seem we have entered the corporate twilight zone when a chief executive is punished for earning investors too much and has to explain that the strength of his company’s profit margins has nothing to do with overcharging for store food and groceries.

There is one line in Woolworths’ profit announcement that I have never seen before in many years of reporting results: “We are focused on helping our customers spend less every time they shop with us.” That’s a new take on corporate capitalism.

Woolworths’ critics (the government, one cohort of customers and a couple of former ACCC chairmen) should be pleased to see that food and grocery inflation is moderating (down to 1.3 per cent in the second quarter), that the outlook for this year’s profit looks weaker than expected and Banducci is promising to tackle shelf prices with more vigour.

Meanwhile, the replacement of Goyder as Qantas chairman was one of the most anticipated personnel decisions in decades.

The disgraced airline’s board needed an injection of experience and corporate gravitas – which they will have with John Mullen taking the big chair around the board table. Mullen has brought with him Nora Scheinkestel, a fellow director at Brambles, to ride shotgun.

Qantas’ woes stem from a similar place to those of Woolworths, in some respects.

Departing Qantas chairman Richard Goyder with newly installed chief executive Vanessa Hudson.
Departing Qantas chairman Richard Goyder with newly installed chief executive Vanessa Hudson.Credit: Eamon Gallagher

Qantas, too, has found itself in hot water with claims it was over-earning at the expense of customers. The record $2.5 billion profit the airline made last year came off the back of elevated airfares, underinvestment in its fleet and diminished customer service, to say nothing of choking its customers’ ability to redeem frequent flyer points.

While the former chief executive Alan Joyce was pinged as the main culprit, the board of directors fell into line behind him thus allowing the tail to wag the dog.

Since Joyce’s departure in September, Qantas’ new chief executive Vanessa Hudson has promised to spend money on a whole raft of measures aimed at improving customer service, bettering on-time performance and reducing flight cancellations.

Just how much profit she is prepared to sacrifice for this will become clearer when Qantas announces its results later this week.

The final high-profile executive churn to make headlines this week was the departure of Virgin boss Jayne Hrdlicka, which probably has more to do with under-earning than over-earning.

Virgin’s ownership masters at private equity firm Bain appear to be underwhelmed by Virgin’s recent performance in what was meant to be the lead-up to its sharemarket float.

Virgin had a window to list last year after it inked a strong result, but didn’t climb through it. Being an unlisted company we don’t have good visibility into how its profit is now tracking. But government-collated information showing cancellation rates and on-time performance isn’t looking rosy.

With several key executives that were crucial to the IPO having recently departed, Virgin’s timetable for a float in May now sits on a scale between wildly optimistic and dead.

You can’t have an IPO without a CEO.

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Source: Thanks smh.com