Virgin Australia Holdings today announced its CEO and Managing Director John Borghetti has resigned but will not be leaving the company until December 31, 2019 – more than 18 months from now – when his contract expires.
Borghetti started with Virgin in 2010 and his legacy is …. well, not great.
Three aspects of his nine-year tenure stand out:
- taking the previously low cost carrier upmarket
- burning extraordinary amounts of cash in doing so
- promising shareholders these were necessary steps on the flight to prosperity.
Which hasn’t happened.
The hard truth is that while it’s a better carrier for customers to fly, Virgin has lost a lot of money under Borghetti’s watch.
From a financial point of view it is in a worse place.
Certainly investors think so.
VAH shares are now worth one-third their value when he joined – 22 cents today compared with 69 cents in March 2010.
Meanwhile, the share price of its bitter rival Qantas, where Borghetti worked for many years, has more than doubled in value over the same period, from $3 to $6.48 today.
The differences between the carriers are many, of course, but one stands out – leadership.
Qantas boss Alan Joyce made some exceptionally tough and ruthless decisions.
Borghetti has not and now he runs the risk of becoming a lame duck leader.