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Every Friday the Diez González brothers connect via teleconference to monitor the critical financial and operational situation that Turbus is currently experiencing. Jesús -leader of the group-, María Soledad, María Purísima and Rafael Diez González have carried out this routine since the end of March, when the most important interurban transport company in the country paralyzed the 1,500 buses that circulated daily throughout the national territory. In such meetings, which previously were held monthly, the board of directors decided, by mutual agreement, in April, to welcome 2,600 workers of the group under the protection of the Employment Protection Law and now it is that same regulation that is being signed at an extreme moment, which is not even ruled out, it could lead to bankruptcy, although today it is not on the table to initiate any action associated with liquidating the company, says its executive director, José Antonio Errandonea.
But in the Diez family there is restlessness. They have been the financial supporters of Turbus – a company founded in 1948 – and in these seven months of the pandemic they have contributed more than US $ 15 million to pay for the deficit that the company generates each month. “There is more and more concern, because negative cash flows are not reversing,” explains Errandonea. It recognizes that if it were not for the contribution of the owners, Turbus would already be bankrupt or, starting an asset liquidation process. “We have not entered into any need to make forced or non-forced asset liquidations, but that has occurred, mainly, because we have the contributions of the partners,” he says. And he adds that thanks to the other businesses managed by the Diez family, such as the importer Caren (of spare parts for buses and trucks), the Coppelia and Contempora ice cream parlor, among others, he has managed to have the necessary resources to continue making the firm of intercity transport.
However, the company knows that this help is limited, especially when they see that the bad business numbers are not reversing, even though in August they reactivated the buses on the roads and in recent weeks the government authorized interregional trips.
And to this is added that in November they are presented with a new dilemma, which is to reinstate the suspended workers, since in October the seven transfers charged to the unemployment insurance of each employee allowed by Law No. 21,227 are exhausted, and because The company does not comply with the requirements stipulated in the extension of the regulations -approved in early September-, which allows it to continue under its protection until January 2021. This decision, which has been analyzed in recent weeks at appointments on Fridays , plans to increase the contribution of the Diez family by more than $ 1,000 million, in addition to the already close to US $ 2 million that they have placed in the company monthly.
“What has allowed this industry to survive in this time has been the Employment Protection Law. An extension was made to the regulation that was promulgated in early September. This, which in the headline was read as a five-month extension, only considers workers who are suspended by act of authority, which is that circumstance where, for some health reason, such as quarantine, certain businesses have to leave to operate. The extension was not allowed, in practice, because it is not financed for suspensions by mutual agreement ”, points out the executive director of the company. He adds that this change to the regulations, which they had not contemplated when the analyzes began in the weekly appointments, “puts greater pressure on the spending level” of the group.
The historic crisis that the firm is facing has caused the group and its executives to break their traditional low profile and today go out and ask for help from various ministries. In fact, in the week that ended, a virtual meeting was held between Turbus executives and advisers from the Ministry of Labor to explain their situation and ask that their workers can continue to be protected under the Employment Protection Law. In addition, a meeting was held on the Lobby Law with the Interurban Bus Association (ABI) -to which the group belongs-, to discuss the issue, confirmed in the ministry directed by María José Zaldívar.
On Thursday, the intercity bus unions and also Turbus executives went to the Ministry of Economy to leave a letter explaining what the industry is facing, which has a total universe of 35,000 workers.
In the middle of this week it will be the turn of the Treasury, where the executives of the interurban transport company will meet with the undersecretary of the portfolio, Francisco Moreno.
“What we have proposed to the authority is not something very exceptional: that those companies that have been classified as essential, as is our case, but whose level of operation has been ostensibly lower than the historical one, can benefit from the same benefits as they were established in the law and to which companies that have not been considered essential can apply ”, details Errandonea. “We have made arrangements, raising the points, but we have not had a satisfactory response,” he adds.
Given this, the family and executives are already working on a plan B. It is because the deadlines are pressing and there are only two weeks left to reach November and have to reinstate its 2,600 suspended workers.
Under this scheme, the alternatives are two: activate all the suspended workers. In this case, the company could receive the subsidy contemplated in the return to employment plan designed by the government, an amount that amounts to $ 160,000 per worker. “But the average incomes of suspended workers are much higher than that, which is why it would be a palliative help, since a relevant percentage of salaries would have to be covered with flow from members,” explains Errandonea.
The other option is, by mutual agreement, to reduce the working day, so that the re-entry of workers is gradual. “If we think of a 50% reduction, that would be similar to activating 50% of the people. That lessens the problem. One can access the benefit of the employment subsidy there, a contribution that would be partial, that is, about $ 80,000 per worker. Even so, in financial terms, the situation is once again a complex scenario, “he says.
For this reason, the company has been in talks with its unions, since, if the scenario does not change, it will have to start a new separation process, the third of the year.
“We have been very transparent with our union organizations: we had the ability to support them while the Employment Protection Law was in force, if it is not in force, the reality is that we would have to make an additional reduction in staff, because we need a staff more in line with current sales levels. Not reaching the endowment to operate today, but one that we would need about nine more months from now, “says the executive. And that staff will probably be less than the 4,000 employees they currently have on the payroll, which in turn is around 30% less than what existed in December of last year, when the staff reached 6,000 people in the group.
“As executives, we have already alerted the owners of the company that if the situation does not change, we would have to make additional reductions in personnel,” anticipates Errandonea. And he adds that work is being done on the formula to finance potential terminations. “These settlements would be financed with direct credits from the company, or they could be contributions from the family through cash flows from other businesses,” he says.
Currently, the sales level of Turbus, a company that in previous years generated revenues close to US $ 500 million, is only 10% compared to normal times. In fact, the recent National Holidays holiday has been the worst long weekend in the history of the company, Errandonea says. And given the volume of sales, the firm is operating with only 25% of its fleet and the occupational factor of the buses reaches 30% – the average is 60% -, a capacity that only allows financing the cost of the routes, but not the full operational structure.
For this reason, in the Friday meetings, the Diez González brothers, together with the main executives of Turbus, monitor the entire expense structure and the operational situation of both their firm and that of the competition, in relation to how many outputs the companies have. other interurban lines that are active and the load factors of the buses.
One of the next decisions that the family will have to make is the size that Turbus will have once the current crisis is over. The group plans to reduce the company and also offer a more basic service, focused on the transfer rather than the travel experience, similar to what the intercity bus industry in Europe experiences.
