Joyce pockets $5m to trump Virgin rival in pay stakes
On the measure closest to the hearts of most executives - base pay and bonuses - Mr Joyce has pipped his former Qantas workmate to the title of Australia's highest-paid airline CEO.
A year after he took the honour, Virgin's annual report shows Mr Borghetti's take-home pay amounted to $2.66 million for the year to June, compared with the $3.33 million Mr Joyce pocketed for the year to June.
But when including long-term bonuses which they may or may not receive, the statutory pay number for Mr Joyce of $5.1 million outstrips the $3.7 million for Mr Borghetti.
The Virgin boss' pay dropped only slightly from 2011-12 due partly to a contractual bonus for the completion of the takeover of West Australian airline Skywest, and the purchase of a controlling stake in Tigerair Australia.
The board also decided to boost his base pay by $350,000 because Virgin's restructure was ahead of schedule.
Its other top executives had cuts to their pay in a year in which the airline slumped to a $98-million annual loss due to stiff competition in the domestic market, disruptions caused by a new reservations system and the carbon tax.
While disappointed with Virgin's annual loss, its largest shareholder, Air New Zealand, vowed on Friday to "support and buttress" the airline if needed alongside Singapore Airlines and Etihad.
The three airlines have already provided Virgin with a $100 million line of credit in the event that it needs support. Singapore Airlines has a 19.8 per cent stake, and Etihad 17.5 per cent.
Air New Zealand chief executive Christopher Luxon told his airline's annual meeting that Virgin's recent loss was a "disappointing outcome" but he emphasised that it was challenging a "formidable competitor" in Qantas.
While facing a "capacity and price war", Mr Luxon said Virgin had made decisions such as buying Skywest and a controlling stake in Tigerair in order to set itself up for the long term. It now had a portfolio of brands and aircraft that could be used to compete more vigorously against its main competitors.
Air New Zealand's departing chairman, John Palmer, also said a strong presence in Australia was critical to the profitability of the Kiwi airline, citing the feed of passengers onto its network from Virgin.
Mr Palmer said it offered Air New Zealand other opportunities, citing the potential for a closer relationship with Singapore Airlines. The latter has an alliance with Virgin.
Air New Zealand will also restart an on-market buyback of up to 3 per cent of its shares, which will temporarily boost the New Zealand government's 73 per cent stake in the airline because it will not take part in the program. The government plans to eventually reduce its stake to 51 per cent.
Frequently Asked Questions about this Article…
Alan Joyce's reported take-home pay for the year to June was $3.33 million. When long-term bonuses that may or may not be paid are included, his statutory pay rises to about $5.1 million.
John Borghetti's take-home pay for the year to June was $2.66 million. Including potential long-term bonuses, his statutory pay was reported at about $3.7 million.
On the measures closest to executives — base pay and bonuses — Alan Joyce edged out his former colleague. Joyce's take-home pay and his higher statutory pay including potential long-term incentives put him ahead of Virgin's CEO in reported pay comparisons.
Virgin's $98 million annual loss was attributed to fierce domestic competition, disruptions caused by a new reservations system, and the impact of the carbon tax. The tough year also led to pay cuts for several of the airline's top executives.
Virgin's largest shareholder, Air New Zealand, together with Singapore Airlines and Etihad, pledged to support the carrier if needed. The three airlines have already provided a $100 million line of credit. Singapore Airlines holds a 19.8% stake and Etihad holds 17.5%.
Air New Zealand says a strong presence in Australia is critical because Virgin feeds passengers into Air New Zealand's network. The carrier also sees Virgin's market position and partnerships as offering longer-term strategic opportunities, including closer ties with Singapore Airlines.
Virgin bought Skywest and a controlling stake in Tigerair to build a broader portfolio of brands and aircraft. Management says those moves were intended to position the airline for longer-term competition against major rivals like Qantas.
Air New Zealand will restart an on-market buyback of up to 3% of its shares. Because the New Zealand government won't participate, the buyback will temporarily increase the government's current 73% stake; the government intends to reduce its holding to 51% over time.
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