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  • Business travel specialist Corporate Travel Management (CTD) has suspended its earnings guidance completely for the current financial year
  • As the Covid-19 epidemic ravages global markets, travel companies are suffering some of the biggest blows
  • With this week’s ban on international travel from Europe to the U.S., Corporate Travel said things are too volatile to predict accurate earnings
  • The company will be cutting costs by shortening the working week and paying proportionately
  • Further, non-executives will get a pay cut to the tune of 20 per cent
  • Shares in Corporate Travel Management fell just over seven per cent today to $7.96 per share

Business travel company Corporate Travel Management (CTD) has suspended its earnings guidance entirely as the Covid-19 crisis continues to ravage global markets.

Travel and tourism groups have typically been among those suffering the biggest blows in 2020 so far, and Corporate Travel is no exception: since the start of the year, shares in CTD have lost over 60 per cent of their value.

The company did its best to brace investors for the impending blows in February when it downgraded its annual earnings guidance. Corporate Travel was assuming the worse end of predictions in the February half-yearly report, saying already the 2020 financial year has brought with it “the most extraordinary combination of macro challenges” in company history.

Of course, in less than a month things have gone even worse than predicted: not only is Corporate Travel in the direct firing line of this week’s travel ban from Europe to the U.S., but corporates are limiting travel privately as they try to mitigate the spread of the virus.

With Corporate Travel specialising in business flights, the dried-up client activity is dealing some damage to the company’s revenue. Corporate Travel said it cannot yet predict when the world of corporate travel will return to normal.

Given the uncertainty, the company has made the call to completely suspend its earnings guidance for the 2020 financial year.

However, today’s bleak news does not come without its silver linings. CTD said the majority of its total transaction value (TTV) comes from domestic travels as opposed to international ones.

In Australia and New Zealand, domestic flights make up roughly 65 per cent of TTV. In The U.S.A. and the U.K., this number is around 70 per cent. Thus, the international flight bans will not have as severe an effect as shareholders might have thought.

Corporate Travel admitted, however, that TTV from Asia was predominantly international in nature.

The company will be cutting costs in the form of shorter working weeks and proportionate pay across the executive team and all staff. Further, company non-executive directors are shaving 20 per cent off of their annual salaries for the rest of the year.

Corporate Travel comforted shareholders by explaining that with a positive net cash position and a debt facility not set to expire until August 2022, it expects to be able to withstand a “prolonger period of reduced activity”.

Further, the company’s 18-cent interm dividend will still be paid out in April.

Of course, all the comfort in the world couldn’t see a travel stock escape another ravaging on the market today. As the ASX plummets once again, CTD shares are trading 7.44 per cent lower at lunchtime AEDT at $7.96 each.

CTD by the numbers
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