Costs must be cuts to meet the realities of the market, Jetset Travelworld Group chief executive Peter Lacaze has stressed after the company today announced plans to shed 110 jobs in its business travel and wholesale divisions.
All businesses in today’s environment are looking at their cost base and are being forced to make tough decisions, he said.
“We are not on our Pal Malone with this,” he said, referring to today’s announcement from Fairfax to cut 1900 jobs over the next three years.
“You have to adjust costs to meet the realities of the market and we now have the right structure and cost base for the future.”
Around 60% of the losses will come from its corporate travel division, around 30 from wholesale and a further 10 from other parts of the business. The restructure will cost $7.5m although it will deliver annual cost savings of $9m.
Together with the job losses, JTG is expected to incur a non-cash impairment charge of $11 million relating to its Travel Management division.
JTG said the impact will see pre-tax profits fall below last year’s $30.7m. Excluding the restructure and impairment charge, pre-tax profits of between $30m and $35, have been forecast.
Lacaze initiated a business review in April after worse than expected trading in March and April.
“It was the worst March and April I have seen,” Lacaze said. “May was a lot better and June is patchy but in line with expectations.”
He predicted first half of the 2012/13 financial year would be “no worse” than current trading.
Lacaze said the reduction of staff at its Travel Management division would not result in a deterioration in service levels. Improvements to productivity and systems have already been made, Lacaze said “and there is more we can do”.
