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11 March, 2020

Helloworld and Webjet execs take pay cuts to reduce COVID-19 impact

Helloworld Travel and Webjet are taking decisive action to reduce the adverse outcomes of coronavirus on travel demand.

Helloworld’s measures include increasing its domestic leisure offerings, promoting destinations still regarded as safe to travel to and cutting costs across the business.

For the remainder of this financial year, Helloworld’s chairman and non-executive directors will take no fees, CEO and managing director Andrew Burnes (pictured above) will take a 30 per cent salary cut, and the company’s executive management team will take a 25 per cent salary cut.

In addition, Helloworld has halted all non-essential recruitment, employees are being asked to take paid or unpaid leave and all discretionary expenditures are being reduced or eliminated.

“Over the last two weeks, we’ve seen a steady decline in bookings in some parts of our business – particularly cruise, inbound to Australia, wholesale to Asia and Europe, and in corporate international travel,” Burnes said.

“At the same time, we’ve seen cancellations increase in these areas, and we anticipate lower demand to continue in to Q1 and possibly Q2 FY21, so we are taking action now to reduce our costs to sustainable levels based upon what we are seeing in the market in Australia and New Zealand at present.

“Helloworld is a strong business with a solid balance sheet, low debt levels and a mix of business, some of which are being impacted and some of which are not.

“We’re in a good position to see this through, but like so many businesses in tourism and other industries, we need to take steps to right-size our operations for the journey ahead.

“Who knows how long this will go on, but it will eventually get better and the world will recover and we want to ensure we are well-positioned when that happens to meet the leisure and corporate travel demands of our customers in Australia, New Zealand and around the world.”

Similarly, Webjet has announced steps to mitigate the impact of COVID-19, including the implementation of a company-wide cost reduction program to minimise operating expenditure, which is expected to result in $10 million in savings for the remainder of FY20.

As part of the cost reduction program, managing director John Guscic (who only recently received a big pay rise) and the company’s board of directors have voluntarily agreed to reduce their salary and directors fees by 20 per cent with immediate effect “until conditions return to normal”.

Furthermore, Guscic has also agreed to forgo any bonus that would have been achieved in FY20.

Webjet boss John Guscic

Webjet has also withdrawn the FY20 earnings guidance it issued to the market in February.

“With COVID-19 placing downward pressure on bookings, we are focused on mitigating the short-term impact to earnings, but importantly, we remain intent on retaining our leadership positions in our global WebBeds business and Australian Webjet OTA,” Guscic said.

“Webjet has a strong balance sheet and low net debt levels, ensuring we are well placed to weather this event.

“In the immediate term, we have taken steps to ensure we maintain this strength through cost reductions and have the flexibility in our operating model to allow us to implement further changes should the situation require.

“Our momentum prior to COVID-19 was well ahead of the market and we are preparing ourselves to take advantage of what is likely to be a faster-growing market when broad-based travel returns globally.”

The moves by Helloworld and Webjet come after Qantas announced cuts to its capacity and executive salaries yesterday.

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Andrew Burnes coronavirus COVID-19 helloworld helloworld travel john guscic webjet