- Legal States
Julie Moraine July 9, 2020 3 min read
Casinos Austria to Restructure Business in a €40m Cost Reducing Plan
In a bid to restructure and reshape its business as a more resilient company, Casinos Austria will be looking to save estimated €40 million in costs.
Casinos Austria Announces Restructuring Plans, Takes a Look at Layoffs
Casinos Austria supervisory board announced a new restructuring plan that seeks to save €40 million in costs at the expense of jobs. The plan, dubbed ReFIT, has prompted Casinos Austria chief executive Bettina Glatz-Kremsner to say that the move is one of the most significant steps forward to optimizing the existing operations and bolster results in the company’s history.
Ultimately, Glatz-Kremsner and the supervisory board expect to see the operator establish its footprint as the uncontested purveyor of gaming products in the country. ReFIT will affect all of the company’s gaming venues, presently 12, so that they can stay profitable and continue to generate revenue.
To achieve this, Casinos Austria will take a look at both its inventory and personnel costs and begin streamlining operation, removing redundancies and making sensible, business-optimization moves where possible.
While no estimate has come from the company as to how many people may lose their jobs, local sources have reported that as many as 500 employees may now be facing layoffs, according to ORF.at and Kontrast.at. The company is also giving up on centralized management, offering each property more in the way of autonomy.
Part of the decision was rooted in the temporary shuttering of all casino properties in mid-March, and their recent reopening to modest operating results at the end of May. The company didn’t hide the fact that its business was “massively affected” by the ongoing pandemic, shuttering of borders and free movement.
Government Restrictions Affect Operations
Other extenuating circumstances have come from the government which has prohibited smoking in closed spaces, which is a move similar to what many states in the United States did. In Las Vegas, industry observers said that banning traditional aspects of the casino experience, such as dining, smoking, and ordering beverages would affect the bottom line of each property heavily.
The new plan is also supported by the majority shareholder in the company, Sazka Group. In giving his reasons for the support, Sazka CEO Robert Chvatal said that the measure was necessary not because of some “patriotic decision,” but rather to help a company that is facing an extraordinarily difficult situation. Sazka itself took a small tumble after crediting agency Fitch downgraded its outlook to Negative and the default rating to BB-.
This restructuring’s goal is simple, Chvatal noted and it aims at improving the overall business operations so that it may allow properties to become more resilient and adaptable, and avoid selling retail venues.
Sazka Group manages the company together with the state’s investment arm, the Österreichische Beteiligungs (ÖBAG).
Giving the ÖBAG’s reasons for endorsing the plan, board member Thomas Schmid emphasized that Casinos Austria remain one of the most important companies on the company’s portfolio.
To move forward with the plan, Casinos Austria will now have to set up internal working groups to enact the necessary changes and achieved the desired goal of slashing operating costs in a bid to cushion the impact of the novel coronavirus outbreak.