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- Flight Centre Travel Group (FLT) has suspended its financial year 2020 guidance, following heightened uncertainty surrounding the coronavirus
- The virus has caused the company to lower its guidance to an underlying profit before tax of between $240 million and $300 million
- The travel group said it will be closing its doors for 100 underperforming stores
- Managing Director Graham Turner said although the outlook and the timeframe for recovery remain unclear, Flight Centre is prepared for these challenges
- Flight Centre will be focusing its marketing on low-risk areas such as domestic travel and the South Pacific
- The company is down 16.8 per cent on the market today, selling shares at $16.31 apiece
Flight Centre Travel Group (FLT) has suspended its financial year 2020 guidance, following heightened uncertainty surrounding the coronavirus Covid-19.
Coronavirus will have a massive impact on the travel company, causing it to lower its guidance to an underlying profit before tax of between $240 million and $300 million. Previously it was $310 million – $350 million.
The company says it has implemented strategies to protect and grow market share, while reducing costs and maintaining its solid balance sheet in a challenging trading cycle.
In the early stages of the second half, Flight Centre said its total transaction value was on track but due to the virus spreading has caused an increase in travel restrictions.
It is still unsure how much the virus will impact the full year or what the timeframe for recovery is.
Flight Centre will also be closing the doors of 100-underperforming stores around Australia and are likely to close before June 30. Sales staff will be redeployed to fill existing vacancies in other shops nearby.
Managing Director Graham Turner said although the outlook and the timeframe for recovery remain unclear, Flight Centre is prepared for these challenges.
He said the company will be using its experiences with SARS in 2003 and during the Global Financial Crisis in 2009 by looking to stimulate demand, while also implementing sensible cost reduction strategies.
“Within this uncertain environment, our priorities are to reduce costs, while also ensuring that we and our people are ready to capitalise when the steep discounting that is underway across most travel categories starts to gain traction and as the trading cycle rebounds,” Graham said.
“As we saw with both SARS and the GFC in Australia, the rebound can be relatively fast and strong after a fairly significant downturn in international travel,” he added.
Flight Centre will be investing in sales and marketing to win the leisure market-share. It aims to advertise current destinations that are at a low risk such as domestic travel and the South Pacific.
Executive earings will also be decreasing, as executives will not earn any short-term incentives for the full year. Directors will give up 30 per cent of their fees for the remainder of the financial year and will review the situation for 2021 financial year.
The company has a strong balance sheet, with $1.3 billion in total cash and investments. It has a $189 million positive net debt position as of February 29.
Flight Centre is down 16.8 per cent on the market today, selling shares at $16.31 apiece at 12:10 pm AEDT.
