Virgin hires John Thomas in management restructure

1466672823104Virgin Australia has hired global aviation consultant John Thomas to lead its main domestic and international operations as part of a major restructure of the airline that will cut management jobs by 10 per cent.

Mr Thomas, the man credited with introducing baggage charges to help save North American airlines in the wake of the global financial crisis, has been appointed to a new position group executive, Virgin Australia Airlines. He will oversee Virgin’s biggest business and report directly to chief executive John Borghetti.

The appointment, which was unveiled to senior management on Thursday, is expected to free up Mr Borghetti from day-to-day operational responsibilities as he focuses on the airline’s partnership with China’s HNA Group and other new strategic opportunities.

The restructure will streamline reporting lines into four separate business units with their own profit centres. This includes the airline’s Velocity frequent flyer, low-cost Tiger Airways and regional and freight operations. The domestic and international business Mr Thomas will lead will encompass flight and ground operations, cabin crew, engineering, network, sales, marketing and other functions.

It is part of a wider effort to address the airline’s financial issues and focus on costs amid questions around its hedging strategy and the need to generate more cash. Virgin last week announced plans to raise more than $1 billion from its airline stakeholders to repair its balance sheet. Over the last month, it has taken on two new strategic Chinese shareholders and flagged plans to introduce flights into China.

Mr Thomas leads L.E.K’s global aviation practice and has been advising airlines on cost-cutting, alliances and mergers and acquisitions for decades. From September, he will be responsible for the mainline domestic and international operations, propelling him to the most senior management role in the company under Mr Borghetti.

“John has worked with many leading airlines on their business strategies for more than 25 years and has played a key role in personalising the customer experience and building new ancillary revenue streams in the US aviation market. John is also a keen recreational pilot,” Mr Borghetti said in a memo to staff obtained by The Australian Financial Review.

The changes are a demotion for three of the airline’s senior executives – chief operating officer Gary Hammes, chief commercial officer Judith Crompton, and chief customer officer Mark Hassell – who will now report directly to Mr Thomas instead of Mr Borghetti.

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