These eventual cuts will be as good an indicator as any of the pandemic's impact on corporate travel volumes for 2021. Other agencies, in other regions with less strict employment legislation, may not be that far behind.
Privately owned American Express Global Business Travel is moving forward with plans to reduce its UK workforce, reflecting the shrinking volumes of corporate travel anticipated for next year and beyond.
This follows CWT’s own global restructuring, which one industry observer said could see job cuts of up to 40 percent of its workforce.
Flight Centre Travel Group, parent company of FCM Travel, meanwhile warned of further workforce reductions if travel restrictions are maintained and government support is removed. That announcement came as it revealed two thirds of its global workforce had already either stood down or been made redundant.
In the UK, the situation is particularly fragile as the government’s furlough scheme expires at the of October. The Business Travel Association has called on the government to provide financial support to cover 60 per cent of salaries of employees in business travel companies until at least the end of 2020.
Amex GBT has 2,200 employees in the UK. A spokesperson told Skift the company was in “a very strong financial position” but that in the current environment it has had to reset its cost base to more closely align with demand. There are reports layoffs could reach 30 percent across the UK locations, but the spokesperson disputed that and said the number was currently undetermined.
“We have taken measures to protect as many jobs as possible, including the use of government support schemes where available, voluntary retirement and voluntary severance programmes, and introducing new flexible working options,” the spokesperson said. “There are some areas where unfortunately these measures alone are insufficient. Only in these specific circumstances, we will consult with our colleagues on the difficult decision to implement involuntary reductions. We continue to consult with and support affected colleagues throughout this period.”
Last year, Amex GBT reported business travel gross sales of $3 billion for the UK, a figure buoyed by its merger with HRG in 2018. Globally, it has 18,000 employees across 140 countries, managing $35 billion of corporate travel. At the time of publication, Amex GBT did not respond to Skift’s enquiry as to whether other countries faced similar restructuring.
In 2019, Amex GBT signed an equity recapitalization agreement with a group headed by Certares taking a 50 percent stake in the company, and American Express retaining a 50 percent controlling. Terms of the deal were not disclosed, but the recapitalization valued the business at about $5 billion. However, private equity firm Carlyle Group and Singapore sovereign wealth fund GIC pulled out of a deal to invest in Amex GBT in May this year.
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Photo credit: American Express Global Business Travel's UK, Europe, Middle East and Africa business is headquartered in London's Canary Wharf. Alex Tai / Unsplash