the new virgin ceo spreads his wings

JOHN Borghetti sounds like a guy who'll get the job done, I think we'll see VBA at $1 sooner than we thought.



New Virgin Blue chief spreads his wings

Glenda Korporaal
From: The Australian March 06, 2010

JOHN Borghetti was at the Formula One Grand Prix in Singapore in September -- indulging in his passion for fast cars -- when he found himself at lunch with Richard Branson and some of his Virgin Group team.

The long-serving Qantas executive was between jobs, having left the airline in May after he was passed over for the chief executive's role in favour of Irishman Alan Joyce.

As the conversation flowed between the two Formula One aficionados, the billionaire Branson and JB, as he is known in the industry, discussed the future of the airline sector and made a casual bet -- the details of which are known only to the pair. As he left the lunch, Borghetti's main thought was a quiet chuckle that his former rival airline operator had picked up the tab.

Two months later, Borghetti got a call from headhunter Heidrick & Struggles, which was looking for a successor to Virgin Blue chief executive and co-founder Brett Godfrey.


Earlier this week, Branson, who holds a 26 per cent stake in Virgin Blue, rang Borghetti to congratulate him on getting the job.

Branson not only remembered every detail of their chat in September -- he reminded Borghetti that their bet was still on.

"It was just a chat over a leisurely lunch," Borghetti recalls over coffee in an inner-Sydney cafe yesterday. "He quoted verbatim my sentence. It taught me two things about him.

"He's got a mind like a steel trap. And he worked out very quickly how to push my buttons. He has worked out very quickly that I can't resist a challenge. And that's what he played on."

Borghetti refuses to reveal the details of the bet -- at least until the winner is known. Until then, the 54-year-old is looking forward to working with Branson when he takes over at Virgin Blue in May.

"I can't tell you how excited I am," he says.

"It's one of the best things that has happened to me."

The quietly spoken, Italian migrant, who worked his way up the ranks of Qantas after starting as a 17-year-old in the mailroom in Melbourne in 1973, admits he was disappointed not to get the top job at Qantas in 2008 -- "but I wasn't suicidal".

Borghetti had been executive general manager of Qantas -- responsible for a turnover of $10 billion in revenue, 16,000 staff and more than 200 aircraft -- for about five years when former CEO Geoff Dixon suggested two years ago that he put his hat in the ring to be his successor. When Borghetti asked for time to think about it, Dixon told him, in his characteristically direct style, that he would be a fool not to put his name forward for consideration. He did, lodging only the second job application he made in his life after the mailboy job.

Qantas chief financial officer Peter Gregg, who many considered the frontrunner for the job, was reported to be more upset with the decision, announcing soon after that he was leaving the airline.

One report had it that Gregg, a Qantas director, was particularly disappointed to learn later that Joyce had been asked to make a private presentation about his plans for the airline when the board and senior executives met in New York.

(In October last year Gregg was appointed as chief financial officer of construction giant Leighton Holdings.)

Airline observers say that the Qantas board, under its then new chairman Leigh Clifford, wanted to make a generational change, choosing the 42-year-old Joyce to replace the 68-year-old Dixon, passing over Gregg and Borghetti, who were in their fifties.

Some say that the board also wanted a cultural change at the top and that Borghetti -- who had been associated with the premium end of the airline group, including revamping first and business class lounges, introducing the Marc Newson-designed flat-bed seats in business class and launching premium economy -- was identified with some of the old culture at the airline.

Borghetti kept his head down, working with Joyce on his transition to the new job, before finally deciding early last year that it was time to look for a new challenge.

He argues that he has actually ended up with the better job -- that being passed over for the top job at Qantas was just a step on the journey of what he argues is the better prize of running Virgin Blue.

"Looking back now, I genuinely believe it was meant to be," he says.

"Some would say, `You didn't get the top job (at Qantas)'. But I have got what I consider something a lot better."

Borghetti has already bought an apartment in Brisbane, where Virgin Blue is based, just around the corner from his 24-year-old son.

While he has spent 36 years at Qantas, Borghetti says that he is now presented with a new challenge of getting to know the team at competitor Virgin Blue. Running Virgin Blue, he argues, also has the excitement of being part of the international Virgin group of companies under the Branson umbrella.

"It doesn't get any better than working with a brand that is associated globally with an enormously popular and successful brand as Virgin," he says.

Borghetti is actually running a smaller operation than he did in his last job at Qantas. Virgin Blue has a staff of more than 6000 with about 80 aircraft and a turnover of more than $3 billion a year. It has a much smaller international operation than Qantas.

But he argues that it is still a big jump to move from his previous job at Qantas to become chief executive of a listed airline.

Born in a small village north of Rome, Borghetti came to Australia at the age of seven when his parents decided they needed to leave Italy to provide the best future for their three young children. None of the family spoke English.

He regards his parents' decision to move halfway around the world as one of the bravest acts he knows.

The eldest of the three children, John went to school in North Melbourne, where he remembers being ribbed for his accent and the kind of food he would bring to school for lunch.

"It was very tough during those years, going to school, looking different, eating different things at lunch time, not speaking the language," says Borghetti. "I got picked on a bit, which was tough. But with hindsight it was a great experience because it taught me some of life's survival skills. It taught me how to read people and where they are coming from."

Borghetti says he first learned about customer service working at his father's coffee shop turned restaurant in Bourke Street, Melbourne -- a job he continued even during his early years at Qantas.

"It taught you a lot about customer service," he says. "It's a big thing in a restaurant, particularly a small restaurant.

"The waiter has to get along with the barman, who has to get along with the cook. All you need is one link there which is broken and the whole chain falls apart. It taught me how to get people to work as a group and the importance of teamwork. It also taught me a lot about consumer behaviour."

His early lessons in customer service, he says, have stood him in good stead in the airline industry. "All airlines are the same -- they all fly in a tube through the air with seats. The only thing that makes a difference is the way that your people handle the customers."

Borghetti joined Qantas just short of his 18th birthday with a view to staying long enough in the job for the travel perks. He ended up staying for 36 years. He rose through the ranks before being moved to Sydney in 1988. His jobs at head office included running Qantas Holidays, which he counts as one of the most fun times of his career.

One person who has watched Borghetti's career over the years describes him as a "quiet achiever".

"John is much tougher than he looks," the person says.

"He is very resilient and he has got a toughness that comes from being a migrant's son and coming from very humble beginnings. He knows the aviation industry inside out. His interpersonal skills are first class. He gets on well with people but he can be tough when he needs to be tough."

Borghetti's contacts at the top level of Australian business are an attraction for Virgin Blue, which is keen to expand its corporate and government business.

Rod Eddington, who has run Ansett, Cathay Pacific and British Airways, describes Borghetti as a "very experienced and widely respected senior airline executive".

"I am a big fan," Eddington says. "There will be many people in the industry who will be delighted that he has got the chance to run an airline.

"John has a lot of friends who will wish him well as they will recognise there are plenty of challenges ahead."

Borghetti faces the tough challenge of competing against his former company with the powerful Qantas-Jetstar combination.

But he argues that knowing your competition is a key factor in running any successful business.

Borghetti rejects suggestions that he has not had experience in running low-cost carriers like Virgin Blue, arguing that he has had direct experience in competing against low-cost carriers and pointing out that at Qantas he was involved in the strategic decisions that led to the launch of Jetstar. Boosting earnings at Virgin Blue's trans-Pacific carrier, V Australia, which was launched during the global financial crisis, will be one of his early challenges.

Borghetti is not saying too much about his plans for Virgin Blue, which celebrates its 10th birthday later this year.

He says his approach will one of "evolution", developing the strategy set down by the airline's founder Godfrey, rather than revolutionary change. "There is a lot of scope for us to continue the work that the team has already done. There is massive opportunity on the revenue and yield side -- and for that matter -- internationally."

Would he consider more international routes? "I don't want to rule out any options," he says.

"Everything is possible."

As someone who prefers to keep a low profile, Borghetti's biggest challenge may be keeping up with the demands for a public profile in Branson's marketing-driven organisation.

At the press conference to announce his appointment this week, Borghetti left his designer suit at home in favour of Virgin Blue's more relaxed, open-necked-shirt look.

"I'm not Richard Branson," he says. "I don't try to be Richard Branson. I am not trying to be anyone other than me."

The Porsche-driving Borghetti is looking forward to getting to the grand prix in Melbourne later this month before he takes on the new job.

And he is enthusiastic that Branson this year has got his own Formula One racing team. Attending the big grands prix around the world with the company's major shareholder was not part of the chief executive's job description at Qantas.

"I hope to get to more (races) now that Richard is sponsoring a team," he says, eyes lighting up at the prospect. "I would love to challenge him in a race."

Another bet maybe?