With most of the countries are under lockdown due to the coronavirus pandemic, online travel aggregators such as MakeMyTrip (MMT) have been severely impacted. Notably, the share price of MakeMyTrip declined from $29.95 on February 12 to an all-time low of $10.8 on Thursday, March 18.
In response to this situation, MMT’s founder and executive chairman Deep Kalra and CEO Rajesh Magow, on Tuesday (March 24), shared a revival plan with the company’s employees.
In a letter, they said that the company is reviewing its operating costs. MakeMyTrip is also planning to undertake multiple tough measures to minimise the overall expenses. “Being an online company, the majority of our costs are variable, however, the situation demands that we take a hard look at all our fixed costs including people costs,” the letter read.
Some of the measures shared by the top executives of the company include reducing variable costs such as advertising, sales promotions and payment gateway costs, along with optimising IT infrastructure and expenses relating to the functioning of our offices and other establishments. The company is also cancelling all the scheduled events, training, etc. MMT is also suspending all the brand-building expenses in the following quarter as well. “There has been a sharp drop in bookings with cancellations and the latest restrictions on domestic air/rail/bus travel has brought our industry to a virtual standstill,” the letter read.
Additionally, the company is also reducing the costs on employee front as well and to set an example both Kalra and Magow are not taking any salaries effective April 2020.
Rest of the leadership team have also offered to take approximately 50% in their compensation. “All of the above makes us confident that we would together be able to weather this storm and come out stronger,” MakeMyTrip’s top executives said.
Low Hopes From Q4
Kalra and Magow also noted that the improved performance of the company in the third quarter of the financial year 2020 was short-lived, thanks to the sharp spread of Covid-19 in India.
It is worth noting that MMT had posted an adjusted operating loss of $11.2 Mn in Q3 2020, down from $19.3 Mn in the previous quarter in the same fiscal. Meanwhile, the company’s revenue increased to $146.9 Mn, from $118 Mn in the previous quarter.
But in the fourth quarter of FY20, these numbers are going to fall down sharply. “These are incredibly tough times that we need to navigate through together,” the letter said.
The top executives of MMT also noted that the company have survived dot.com bust, 9/11 attacks, SARS epidemic, 2008-09 financial crisis and Indian aviation sector challenges in 2012 and 2019.