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SoftBank-backed travel startup Klook to cut staff; co-founders ditch pay

SoftBank-backed travel startup Klook to cut staff; co-founders ditch pay

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3 -min read
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TRAVEL booking startup Klook will be laying off staff, putting some employees on temporary leave and implementing a company-wide reduced work week to cut costs amid the novel coronavirus pandemic.

The co-founders of the Hong Kong-based firm had also stopped taking a salary since February, and will continue to do so until the crisis is over.

In an e-mail to employees, chief executive and co-founder Ethan Lin said the streamlining of workforce will happen across offices and functions.

Travel trade publication TTG Asia reported on Tuesday that the layoffs and furloughs will impact 10 to 20 per cent of Klook's workforce.

As at April last year, the unicorn startup employed more than 1,000 staff across over 20 offices worldwide.

The new four-day work week will mean a 20 per cent salary reduction, "subject to local market conditions", said Mr Lin in the e-mail. It will take place for three months starting from May 1.

Those placed on temporary leave will be away for three months, subject to the company's review of the policy. They will continue to receive healthcare coverage and benefits.

The Covid-19 pandemic has hit the travel sector hard as countries worldwide go into lockdowns or impose movement restrictions.

"Our original projection of a V-shaped rebound is no longer realistic given the severity of the pandemic and the economic impact it has caused in all markets globally. Our numbers are showing us that this is going to be a longer-term fight," said Mr Lin, who co-founded Klook in 2014.

Prior to the pandemic, the startup had been on a growth trajectory and managed to snag about US$520 million from investors such as Goldman Sachs and SoftBank Vision Fund.

But Mr Lin revealed that four years ago, the company nearly ran out of capital and had to consider closing down the business.

"Ever since then, we have made it our No 1 priority to ensure that we have enough capital to run for a good number of years," he said.

Over the last two months, Klook has cut non-essential expenses from business travel to advertising, and has renegotiated rental and relooked software expenditure.

On the workforce-streamlining measures, Mr Lin told employees: "My promise to you is that we are doing this process with respect and transparency, and to do everything we can to support our affected colleagues."

Startups across South-east Asia have begun to cut staff in an urgent bid to reduce cash burnThe Business Times reported on Monday. A database compiled by venture capital firms, called SEAcosystem.com, shows that there are now about 850 people looking for jobs amid the downturn.

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