Virgin Australia Holdings chief executive Paul Scurrah will step down within weeks once the airline's sale to U.S. private equity group Bain Capital is completed, the airline's administrator said on Thursday (Oct 15).
The decision follows reports that he disagreed with Bain over the future direction of the airline.
Scurrah took the Virgin job a year ago and was at the helm when it went into administration in April.
Bain agreed to buy the struggling airline in June, and the deal is expected to be complete by early November.
Virgin Australia Group has been struggling under billions of dollars worth of debt and the impact of the pandemic on the passenger jet market, which has led to the near-collapse of worldwide travel and a huge slump in domestic markets.
Virgin Australia Holdings Ltd CEO Paul Scurrah will be replaced within weeks by Jayne Hrdlicka, the former head of Qantas' budget offshoot Jetstar, as new owner Bain looks to draw in more travellers with a "hybrid" strategy.
Unions representing Virgin employees have been concerned about Mr Scurrah's exit and the possibility of the full-service carrier moving downmarket.
On Wednesday the Transport Workers Union (TWU) suspended negotiations with the airline over pay and conditions.
"What we've done is taken the measured step of halting proceedings until we get some clarity", national president Michael Kaine told Australia's ABC.
He added: "I know there has been speculation about the shape of the airline into the future, and I have reaffirmed with Bain Capital that Virgin Australia will not be repositioned as a low-priced carrier". "This will appeal to the entire spectrum of travelers, from premium companies to more price-conscious customers".
In August, Virgin said it would aim to be the "best value" carrier in the market rather than the cheapest, adding it would retain business class and its airport lounges.
However, Deloitte said it believed the new owners would maintain Virgin Australia as a full-service airline.
Before the pandemic, Virgin had spent a decade transforming itself from a low-priced carrier to a full-service rival to Qantas competing for corporate travellers.
National carrier Qantas reported an annual loss of almost A$2bn ($1.4bn; £1bn).
Bain had committed to run Virgin Australia as a full-service airline, keep 6,000 jobs, maintain regional routes and reopen worldwide travel after the coronavirus pandemic ends.
The airline is not expected to shift operationally and become a "low-cost" airline, similar to Tiger Australia.
The airline had previously held around 31% of Australia's domestic routes, while Qantas controlled roughly 58% of the market.