(Yicai Global) April 20 -- The parent company of leading Chinese online travel agency Tongcheng-Elong denied speculation about mass layoffs as it announced the start of a merger that will combine its main aviation and travel agency businesses.
Tongcheng Group will merge Hongtu Airlines, Tongcheng International Travel Service and Tongcheng Travel (formerly Wanda Travel) into a new company called Tongcheng Aviation & Travel Service Group, the Suzhou-based group said today.
Rumors have been circulating that some online travel agencies were planning to shed over 90 percent of their staff, including senior managers, and close brick-and-mortar stores. But Trip.Com, Tuniu, Lvmama and Qunar have all refuted claims of mass layoffs to Yicai Global, with Tuniu revealing that it will cut some of its management salaries to 40 percent.
An insider at Tongcheng told Yicai Global that the firm’s consolidation would involve some staff restructuring, but no mass redundancies.
Broadsided by the fallout from the Covid-19 epidemic some travel agencies have opted for layoffs or wage cuts, according to Zhao Huanyan, chief analyst from Huamei Consulting. One reason for Tongcheng’s merger is to pool resources, and the firm is likely to adjust its headcount and control costs to some extent, Zhao added.
Shares of Tongcheng-Elong [HKG:0780] fell almost 1.6 percent to close at HKD12.42 (USD1.60) today, while the benchmark Hang Seng Index was little changed.
Hongtu Airlines Chairman Wu Jiazhu will serve as the new company’s chief executive, while Teng Weiwei, former CEO of Tongcheng Travel, will head its travel service unit, Yicai Global learned from Tongcheng.
Formed in 2004, Tongcheng split its business into Tongcheng Network Technology and Tongcheng International Travel Service to go public. Tongcheng Network merged with Tongcheng-Elong and completed the initial public offering in Hong Kong in 2018. Tongcheng Group acquired Wanda Travel, under real estate giant Wanda Group, in 2016 and became the controlling shareholder of Yunnan province-based Hongtu Airlines in 2017.
Editors: Dou Shicong, Peter Thomas