(Ecofin Agency) - Sun International, a hotel group majority-owned by South African investment companies, said it will cut 2,300 jobs in South Africa -one of its major markets- to cope with financial pressure. According to the company, this decision will help save R280 million ($16.5 million) in salary expenses.
The group was mulling over this idea well before the pandemic broke out, and the current Covid-19 situation is calling for an acceleration of the plan. “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.
The first six months of the year were particularly difficult for Sun International which has seen its consolidated turnover drop by 56% YoY to R3.7 billion ($218.87 million). The group’s net income showed a loss of R886 million over the period compared to a net profit of R171 million in 2019.
The company benefits from an insurance policy that protects it against the risk of epidemics and has hired a business lawyer to assist it in filing a claim for damages. No deadline has been set for its insurer's response, but if it is favorable, there will be an adjustment on revenues for the next periods.
South Africa is the most affected country on the continent with 625,056 cases of Covid-19 and 14,028 deaths as of August 31, 2020. Authorities have enforced one of the strictest lockdowns in Africa by closing borders and any place likely to gather large numbers of people. As a result, the casino activities in Sun International's portfolio were negatively impacted.