Casinos Austria Embraces the ReFIT Strategy
The Supervisory Board of Casinos Austria has come to an agreement on the controversial ReFIT plan. This involves downsizing the workforce by 500 employees and reducing salaries. Additionally, the Czech Sazka Group, which owns the majority of the casino chain, plans to separate the casino and lottery businesses. The trigger for these changes is the Coronavirus crisis. Can the labor unions still intervene?
Saving up to 40 million euros
Casinos Austria has gone through some intense months filled with controversies. Apart from the Ibiza video scandal and the sale of Novomatic shares to the Sazka Group, the company has been hit hard by the pandemic. With significant losses, a special supervisory board was formed to restructure the state-owned casino chain.
Recently, the decision was made to implement the ReFIT plan, a restructuring program that entails job reductions and salary cuts. Overall, personnel costs are predicted to decrease by 11%. Concretely, this means the removal of 500 full-time positions, which could save roughly 40 million euros in wages. Shutting down some locations is also a possibility.
The company's works councils vehemently opposed the ReFIT plan. Despite the opposition, the management announced last Wednesday that the program would go ahead. They claimed the reasons for the implementation were reorganization, efficiency improvements, securing profitability, strategic realignment, and downsizing.
Reshaping the corporate structure
Apart from job cuts, the Sazka Group, the new majority shareholder, aims to establish a sovereign headquarters. The casino and gaming business will also be separated from other group verticals. Separate teams will assess processes and find ways to make savings.
This could potentially save up to 1,200 jobs, according to Robert Chvatal, the CEO of the Sazka Group. He suggested reducing the average wage costs by 15-20% to preserve the 12 casino locations of Casinos Austria.
Works councils in turmoil
The six works councils of the casino chain rejected the ReFIT program. Manfred Schönbauer, head of the central works council, criticized the alleged exaggeration of loss figures. Schönbauer supports part-time positions for older employees to cut personnel costs. He suggested reducing pension contributions by 30% until 2022.
"We are looking for a level-headed dialogue with the management (CASAG) to achieve the best possible result for both sides," Schönbauer said. However, no such dialogue has taken place, leading to the rejection of ReFIT. The planning of the restructuring program also incurred high costs. The company retained the consultancy firm McKinsey, allegedly spending more than €500,000 in six weeks.
The losses for Casinos Austria are complex and multifaceted. Mostly, the shutdowns during the Corona pandemic are to blame, but also the smoking ban introduced in November 2019. The Winwin gaming halls and the company's foreign subsidiary are also losing money. Gaming revenues in the first half of 2020 fell from €87.3 million to €52.8 million. Only the lottery and the online gambling site win2day have been profitable.
Since the departure of Novomatic AG, Casinos Austria is largely owned by the Czech Sazka Group. The state holds a third of the shares, with the remainder spread among smaller shareholders. Casinos Austria employs a total of 3,400 people worldwide. The job cuts mainly affect the 1,700 employees working in the Austrian casinos and the Vienna headquarters.
It's concerning that no information has been provided about whether management will be impacted by the cost-cutting measures. The annual salary of the current Managing Director, Bettina Glatz-Kremsner, is rumored to be around €700,000 before taxes, not including any bonuses. Glatz-Kremsner also received a €1.6 million severance payment for her move from the finance department to the management board.
The former managing directors, Dietmar Hoscher and Alexander Labak, are reported to have received million-euro severance payments as well. Hoscher received €2 million, while Labak received €4 million. Hoscher currently works for Casinos Austria, despite his involvement in the Strache scandal.
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Source: www.onlinecasinosdeutschland.com
