11 May 2020

SkyCity proposal to cut 20 percent of staff 'incredibly tough'

6:31 pm on 11 May 2020

SkyCity's latest announcement means it is looking at cutting almost one in five of its staff, in a bid to save $50 million a year as Covid-19 suffocates its core businesses.

Sky City logo

Photo: RNZ / Claire Eastham-Farrelly

With next to no income for its casinos and hotels, the company said its business has fundamentally changed, prompting it to put another 700 of its 5000 jobs on the chopping block after proposing 200 last month.

The group has casinos, hotels, bars and restaurants in Auckland, Hamilton, Queentown and Adelaide.

Workers union Unite hopes the company has not made its mind up just yet - with some hope of an upswing just around the corner.

The SkyCity Entertainment Group is haemorrhaging more than half a million dollars a day in staff costs alone during the shutdown, and is missing $90m in revenue a month.

Chief executive Graeme Stephens said with no international visitors for the forseeable future, large gatherings limited, and domestic customers likely to be a little more frugal, the economic outlook was dicey.

"At SkyCity we are a family and it is incredibly tough to say goodbye to valued team members, however, we need to ensure our business is best prepared to operate in the new environment," Stephens said.

"These difficult actions will help to create a business that is sustainable in the medium and long term and one which can continue to support the thousands of jobs that will still remain."

Gerard Hehir from the Unite Union said the mass redundancies were not a surprise, and they would keep rolling across the sector.

He accepted some jobs will be lost at SkyCity but hoped the company genuinely looks at all the options, and tries to keep as many people as possible.

"Things aren't as bad as they looked a month ago. If there is a trans-Tasman bubble that should weigh on the proceedings. And also there is a budget this week; I'd be stunned if there wasn't specific support for the hospitality industry in particular."

The top earning SkyCity executives cut their pay by 40 percent, and the board 50 percent, as the company took $21m in wage subsidies for its staff.

Before the subsidy period was even over, and before any possible targeted susbidy, it was still proposing redundancy for hundreds.

"SkyCity's not going broke tomorrow," Hehir said. "There are significant financial resources. Yes they've taken a hit, just as everyone in the hospitality industry and economy has. In the end things will bounce back.

"A lot of the staff they may lose are actually skilled, long-serving, dedicated staff. There's a cost to losing people like that, so they should think very carefully."

He said the 1000 union members employed by the company do have a decent redundancy payout in their contract - four weeks accumulated after a year, and an extra two weeks of redundancy pay for each year served.

Without international travel for the forseeable future, many hotels and businesses reliant on tourists are cutting their workforces too.

A hotel industry survey released today showed a bleak outlook, said the surveyor Wim Ruepert of Howarth HTL.

"It depends a little bit by region, but on average roughly 56 percent of employees will need to be made redundant. That varies quite considerably - Queenstown was much higher at 69 percent. I know of hotel groups where 80-85 percent of the people have been made redundant [or are in the process]."

SkyCity declined to be interviewed today other than releasing a statement.

The company hasn't revealed which jobs will go, other than saying it'll be waged jobs rather than salaried. The company said it will work with the affected staff, their managers and unions over the next few weeks.

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