Fjord Line Streamlining Impacts Up to a Quarter of Workforce
Fjord Line, Norway's second-largest shipping company for international passenger and freight transportation, announced major cost-cutting measures to manage the long-term effects of the coronavirus on its business. Up to a quarter of the company’s employees will be dismissed or laid-off Fjord Line said.
Operating four vessels carrying passengers, vehicles, and cargo between Norway, Sweden, and Denmark, Fjord Line said that although it had been able to enhance its liquidity that it felt it was prudent to take steps to streamline as it enters the fall and winter season. It expects even more limited traffic than normal for this time of the year in part due to the governments’ recommendations to limit travel.
“The year 2019 was a record year for us in terms of both revenue and profit, and we were very optimistic about 2020,” said Rickard Ternblom, CEO of Fjord Line. “Unfortunately, however, everything changed with the release of the COVID-19. Bookings are now a mere fraction of what that would normally be. So, we are now preparing for the fact that it may take a long time before we can return to normal operations.”
Before the onset of the pandemic, the company reported it had about 800 employees and transported over 1.4 million passengers annually. While saying they had been successful in creating cost savings through streamlining and automation in the past, and that the summer season had gone well, Fjord Line said further action was necessary to create additional cost savings due to the uncertainty as to when traffic would return to normal levels.
“Even with the government plans for extended layoffs, compensation, and loan guarantees, we cannot avoid the fact that employees will be affected. Up to 200 people will be dismissed or laid off,” said Ternblom. “Cutting costs is the only thing that helps when revenues fall as drastically as they have in the last few months.”
The company acknowledged the support of its owners, banks, lenders, suppliers, and partners which had helped it to raise additional capital. They forecast an estimated positive cash flow of NOK 700 million (approximately $77 million) for 2020, “which secures operations for the rest of this year.”
“So far, everyone at Fjord Line has contributed to volunteer work. I am humbled by the efforts our employees have made in these extraordinary circumstances,” said Ternblom. “This crisis is not over and no one knows how long its effects will last. In order to secure jobs and emerge from this crisis even stronger, it is absolutely crucial that we reduce our operating costs to a minimum.”