Thousands more Australian workers have been stood down, as Flight Centre and retail group Premier Investments shut stores in response to the coronavirus pandemic.
A company on the frontline of the travel industry downturn, Flight Centre has announced that 6,000 support and sales workers will be made redundant or temporarily stood down globally, including 3,800 in Australia.
“A high percentage of the work which people normally perform has stopped and maintaining staff and shop numbers at pre-virus levels has become unsustainable,” it said in a statement to the stock exchange.
The cuts represent 30 per cent of the travel group’s workforce of 20,000 and come as it prepares to shutter further shopfronts.
Flight Centre said it had spoken to other potential employers to create a pool of 10,000 sales and call centre vacancies for stood-down employees.
The company had previously announced the closure of 100 stores across the country over the next year and had suspended its shares from trading on the ASX, as it assessed the impact of major flight suspensions by the airlines.
Today, Flight Centre said it had fast-tracked store closure plans globally and would be able to close around 30 per cent of its outlets in Australia over the next few months.
“Changes to these plans are likely if market conditions deteriorate further, if restrictions are in place for an extended period or if demand rebounds more rapidly than currently expected,” it said.
The thousands of workers stood down from Flight Centre join a growing list of people out of work as the coronavirus crisis escalates, including 20,000 staff from Qantas, 8,000 from Virgin Australia and more than 1,500 from travel group Helloworld.
Leading economists are forecasting the unemployment rate to surge — Westpac’s chief economist Bill Evans sees it hitting 11 per cent in coming months.
Premier Investments to stand down thousands of staff
The retail group behind stationery brand Smiggle, sleepwear chain Peter Alexander and fashion outlets including Portmans and Just Jeans will close all retail stores in Australia from tonight until late-April.
Premier Investments said all its employees in Australia would be temporarily stood down as a result, except for “a small number of employees required to perform limited essential work”.
“This means our team members will not attend work and will not be paid,” it said.
“We have put in place special arrangements for employees to access accrued annual leave and long-service leave entitlements.”
Premier said the closures would affect 9,000 employees globally, following similar decisions in New Zealand, the UK and Ireland.
Premier to stop paying rent as landlords await Govt announcement
In a statement to the stock exchange, the company said it “intends not to pay rent globally for the duration of the shutdown”.
It said 70 per cent of its store leases in Australia and New Zealand had leases expiring this year or were already in hold-over periods, where leases had already expired.
“[Premier’s] threat to close stores if landlords don’t play ball, I think is a wake-up call to the landlords and it forces them to think very carefully about what they want to look like when the recovery occurs,” Roger Montgomery from Montgomery Investment Management told the ABC.
Mr Montgomery has spoken to landlords, who say they have the ability to make concessions to keep retailers in their shopping centres and malls.
“It’s not unusual for them to give three to 12 month rent-free incentives at the start of the lease, that’s quite normal, so that capacity is available” he said.
“But there has to be some balance, it isn’t fair, for example, for a tenant to say ‘I’m not paying my rent but I’m going to keep trading, I’m going to keep paying for my inventory’.”
Mr Montgomery noted that Premier is in a powerful negotiating position due to its size and previous success, whereas smaller retailers would not have as much bargaining power.
“Big tenants get a benefit, small tenants get shafted and you end up with less competition out the other side of this in retail.
“So the Federal Government in thinking about what legislation they release in terms of leases, they’ll need to consider all of those aspects.”
The Western Australian and NSW governments have been tasked with developing measures to provide relief for residential and commercial tenants, with the proposals yet to be unveiled by Scott Morrison.
Today, Flight Centre said it was in discussions with its landlords about rent-free periods and more flexible trading hours, and negotiations to date had been “positive”.