SUN International is planning to cut 3,300 jobs in South Africa and Chile as part of a restructuring plan to survive the pandemic, which took the firm into a half-year headline loss of 885 million rands ($53.26 million) on Monday.
The hotel and casino industry, which counts on international travellers and the sale of alcohol, has been one of the hardest hit by lockdown restrictions imposed from March 27 to curb the spread of the coronavirus.
Properties of the casino and hotel company were forced to close for over three-months in South Africa, while in rest of Africa and Latin America, its operations still remain closed.
Prior to the pandemic management was reviewing employee structures at certain operations as well as the cost base across its South African businesses, it said.
“The COVID-19 pandemic required us to undertake a deeper review as we anticipate that it will take some time for our properties, in particular our hotels and resorts, to recover,” Chief Executive Anthony Leeming said, echoing a sentiment shared by the tourism industry.
The review has resulted in proposed cuts of about 2,300 employees in South Africa, a move that could save up to 280 million rand in employment costs.
The proposed retrenchment exercise will impact the Sun City resort, the Maslow Sandton hotel, the Boardwalk casino and hotel, The Table Bay hotel and Wild Coast resort, the firm said.
In Chile, Sun International has started a voluntary retrenchment process involving about 1,000 people, with 451 employees to date accepting the offer, the firm said.
The firm has also identified cost savings of more than 250 million rands in outsourcing and service provider contracts, IT systems and other areas.
Consolidated income declined by 56% to 3.7 billion rand in the six months ended June, while earnings before interest, tax, depreciation and amortization plunged by 96% to 79 million rand.
The firm took impairment charges of 1.2 billion rand related to its hotel and resort properties.
Post-lockdown income has started to recover, with its gaming operations achieving 39% of income in July compared with the prior comparative period and 56% during the first 27 trading days of August.
This pushed its shares up 4% by 1009 GMT.