Korea's No. 1 travel agency Hanatour Service to cut payroll amid virus crisis

[Photo by Kim Ho-young]

South Korea’s No. 1 travel agency Hanatour Service Inc. has opted to cut payroll as its international business has put on hold for nearly a year.

It is planning to rationalize the business in division and team levels and preparing face-to-face talks with employees for downsizing, Hanatour Service said Monday.

“The company is already in danger of business shutdown. After the rationalization, it could change the focus of business,” said a company official. Details about the scale of downsizing, compensation benefits and the type of restructuring were not disclosed.

Hanatour Service last year logged an operating loss of 27.5 billion won ($24.9 million) in the first quarter, 51.8 billion won in the second quarter and 30.2 billion won in the third quarter.

Employees went on paid leaves from March to May and then unpaid leaves from June. The state subsidy to support their employment retention ended December.

Hanatour Service now is left with 2,300 on its payroll, down from 2,500 as of the end of 2019.

The move by the country’s largest travel agency could trigger a domino effect in the tourism industry on the brink of collapse amid year-long global virus crisis.

Lotte Tour Development Co. last year cut nearly one-third of the 300-stong travel division through early retirement. Freedom Travel Co. also reduced its payroll to 30 in the first half of last year from 130 before the virus outbreak.

Hanatour Service shares lost 7.09 percent to close at 60,300 won in Seoul on Monday.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]