- Travel agency Flight Centre (FLT) has scrapped its 40-cent interim dividend today
- The decision came after the Federal Government put fresh travel restrictions in place over the weekend, banning all non-essential interstate travel
- Flight Centre is bracing for a quarter of turbulence as COVID-19 is expected to result in shop closures and job losses across the company
- Managing Director Graham "Skroo" Turner has put himself in the firing line as the Flight Centre leadership team slashes their own salaries in half
- Shares in Flight Centre are sitting in a trading halt today, but last closed worth just under $10 each
Household travel agency Flight Centre (FLT) has made the call to scrap its interim dividend in light of recent heavy travel restrictions.
The company broke the news to shareholders this morning after the Federal Government banned non-essential domestic travel to stop the spreading COVID-19 pandemic.
Flight Centre has already seen its share price take a beating from the ongoing travel restrictions, but before today's announcement requested a trading halt as it takes time to develop its response to the weekend's heightened local restrictions.
Released in tandem with the news of the scrapped dividend is a letter to shareholders and customers from Managing Director Graham "Skroo" Turner.
In his letter, Graham said his company has been unable to operate in "anything like a normal manner" since the coronavirus gripped global economies.
In fact, the company has had to close shops around the globe as it can't provide many of its key services with unprecedented travel restrictions.
Further, Graham told shareholders job losses within the travel industry and within Flight Centre are "inevitable".
"Losing people will always be our last resort and it is a decision we will never take lightly. We will work hard to find suitable support and alternatives for anyone who may be displaced," Graham said.
However, Graham is following the footsteps of other leaders in the travel sector by personally fronting the financial blows to the company before letting his employees fall. Graham told shareholders today the Flight Centre senior leadership team will each be giving up half of their salaries to help reduce company costs.
Of course, as Flight Centre enters hibernation mode and does everything it can to survive the COVID-19 infection, the $40 million heading shareholders' direction will go a long way to protect the company from falling too far.
"Today, we have made another difficult decision by cancelling the $40.1 million interim dividend payment that was due to be paid to shareholders next month," Graham explained.
"Cancelling the dividend was not a decision that was taken lightly, but we felt it was appropriate to preserve cash and protect long-term shareholder value, given the current uncertainty and the unprecedented actions that governments have been forced to adopt to slow the coronavirus’ spread," he said.
Flight Centre shareholders would have received 40 cents per share, fully franked, had the payment not been scrapped.
Shareholders have not had a chance to react to today's news given the company's trading halt. Nevertheless, shares in Flight Centre were trading for $39.48 each on February 21 but closed at just $9.91 on Thursday afternoon last week.