SkyCity announces restructure, 200 jobs to go

Friday, 3 April 2020

SkyCity will let 200 staff go because of the closure of its businesses across New Zealand and Australia in the Covid-19 lockdown.

SkyCity chief executive Graeme Stephens said the Covid-19 crisis has caused an 'unprecedented impact on people, businesses and the global economy'.

'During the closure, we face almost $90 million in lost revenue per month whilst still incurring significant costs such as utilities, lease payments and labour, with labour costs alone around $20 million per month,' Stephens said in an announcement to the NZX.

'This is a storm we could, and would, weather if we were to reopen within a few months in a pre-Covid-19 world.'

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But Stephens said the closures would also have a long-term impact on the business.

'Even when we fully open, we reasonably expect that weaker economies, lower personal disposable income and changed entertainment habits, as well as longer-term travel restrictions, will result in us recommencing as a smaller, domestically focused business.'

SkyCity employs more than 5000 people.

The entertainment group has closed its Auckland, Hamilton and Queenstown sites, which are deemed non-essential services.

The SkyCity board of directors had volunteered to cut its fees for the remainder of the financial year by 50 per cent.

'We have asked waged staff to cut to 80 per cent of normal wages and, on this basis, we can carry their cost,' Stephens said.

'Those not wishing to reduce wages have been offered the option of voluntary redundancy. This provides us with some time to assess how the impact of Covid-19 evolves. Based on our current assessment of the likely operating environment, were it not for the subsidy we would be forced to make some 700 waged people redundant now in order to right-size our labour workforce for the future.

'For our salaried employees in New Zealand, the subsidy is less meaningful and, consequently, we will need to reduce our headcount to a level more commensurate with our anticipated levels of trade once we reopen. This will lead to redundancies for approximately 200 of our people and we will be starting this process with immediate effect.'

Stephens said the fully implemented cost reduction plan for salaried and waged staff would impact around 900 people and generate labour savings of close to $50m per annum – a reduction of about 20 per cent.

'The estimated cost of the redundancies is $11 million. We will review our outlook as the crisis evolves and may need to make further changes, especially if our properties remain closed beyond June 30 2020 and/or travel restrictions remain in place for an extended period.'

Last week Stephens told staff redundancies were inevitable because of the impact of the coronavirus on its business.

He also told staff to find 'some benefit from not being at work'.

'There is only so much you can worry about and almost nothing you can do about it. I find that dealing with uncertainty is generally harder than dealing with a known challenge and we will do what we can to provide updates and information as fast as we can.' 

Stephens along with executives reporting directly to him will take a 40 per cent cut to their salaries for the remainder of the 2020 financial year. 

It was forced to closed its Adelaide operation following a similar mandate by the Australian Government. 

As there was no work was currently possible on the SkyCity convention centre NZICC and Horizon Hotel project the project would be delayed.

Stephens said the delay was helpful for its debt position.