The Star Entertainment Group is laying off 90% of its workforce following the Australian casino shutdown. Australian Prime Minister Scott Morrison ordered all casinos to close for business earlier this week.
Investors learned on Wednesday Star’s plan to lay off staff. The casino giant currently employs 9,000 staff but 8,100 of those employees are now out of work. COVID-19 has claimed lives around the world, it now has another human cost in Australian.
Star’s directors issued an announcement to the Australian Securities Exchange on March 25th. All publicly listed companies are bound by law to make announcements of major changes to business practices.
8,100 Staff Lose Their Jobs
The official announcement stated “the shutdown of the casino properties will have a material impact of The Star’s operations.” It also states The Star’s management team is implementing strategies to minimise the closure’s impact.
Reducing operating costs and capital expenditure is at the forefront of The Star’s contingency plans. Unfortunately for The Star’s 9,000 staff, they are one of the biggest business expenses.
“As an immediate measure, The Star has taken a very difficult, but necessary, decision in relation to its workforce. We are in the process of temporarily standing down over 90% of our approximate 9,000 employees. These stand downs include senior management. To assist our employees at this time, The Star has provided two weeks of pandemic leave. In addition, employees will be able to access any accrued annual and long service leave entitlements.”
Star’s board members and senior management are forgoing a “significant percentage” of their entitled fees and salaries. How much is currently unknown, although the figures will be announced soon.
Chairman and MD Praise Staff
Chairman John O’Neill AO acknowledged the impact of this unprecedented move has on his staff.
“This is a unique environment and one beyond our control in which we’re determined to balance the necessary measures needed to protect the business while considering the considerable human impact to our workforce.”
Managing Director and CEO Matt Bekier said, “We have incredible people at The Star and huge potential. We are also confronting, like the rest of society, an unprecedented challenge in the COVD-19 situation.”
Huge Financial Implications
The Star halted trading of its shares on March 23rd when the price plummeted like a stone. Shares in The Star traded at $3.60 on March 4th. They fell to $2.01 by March 16th. A new historic low of $1.62 was reached on March 20th. Shares have since rallied a little to $2.00 but things don’t look good for investors right now.
The company has approximately $480 million in cash and overdrafts available, but this won’t last forever. Star continues to operate its hotel business, albeit with a vastly reduced capacity.
Crown Resorts, Star’s main rival, is yet to make any announcement regarding its staff. There has been radio silence since Monday when it revealed the closure of its UK-based Crown Aspinalls VIP casino. Crown and Star had previously turned off half their pokies to comply with social distancing measures. Morrison forced a total closure soon after.
The future of the 1,000 staff at SkyCity Entertainment Group’s Adelaide casino is uncertain. Significant layoffs are expected.
Can The Australian Government Provide Assistance?
Laying off any staff is never good news, but it is particularly bad at this time. More than 10,000 casino employees will be out of work if Crown follows in Star’s footsteps. There are not 10,000 jobs available at a time where business around Australia are bolting their doors shut.
Could the Australian government step in and provide assistance? Our cousins in the United Kingdom are being helped significantly by the government. British Prime Minister Boris Johnson announced all British staff who are unable to work will receive 80% of their salary from the government.
The army of self-employed staff in the UK received the same news only yesterday. Here’s hoping Morrison and Co. can produce a similar package during these difficult times.