Flight Centre records first loss since 1982 in a devastating blow
Flight Centre has been hit harder by COVID-19 than almost any other Queensland business, as its CEO reveals more than $600 million has been refunded to travellers, while the company has made its first loss since 1982. But that’s only part of the story.
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Brisbane’s Flight Centre Travel Group has revealed more than $600m has been refunded to customers whose holidays were cancelled due to COVID-19, with the extent of the pandemic’s damage now clear.
Flight Centre posted a full year statutory loss of $849m before tax compared to a $343.5m profit the previous year, according to an ASX update on Thursday.
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The Southbank business recorded its most challenging year in history with sales plunging 36 per cent, 70 per cent of its workforce stood down or made redundant and half its global stores closed.
Flight Centre CEO Graham Turner said the annual loss was unprecedented.
“There’s no comparison, we’ve never posted a loss since 1982,” he said.
Last week Flight Centre staff issued $20m in refunds, with Mr Turner acknowledging there was frustration from some customers who had waited for their money back.
“We’re an organisation that’s been built to sell travel, not to process refunds,” he said.
“There were hiccups recently but in Australia for example we’ve got 1500 people processing refunds.
“We’ve become much better at it.”
Mr Turner, whose own fortune has taken a belting due to COVID, said the business was well-positioned to take is share of the market when it returns.
“That depends on government restrictions being eased, particularly in Australia and New Zealand,” he said.
Mr Turner tipped the virus would be around “for years and years” and reiterated his view that things needed to get back to normal.
“I share with just about everyone else in business, travel, airports airlines hospitality and tourism - we’ve got to be able to live with this virus,” he said.
Mr Turner, who along with executives and the board took a 50 per cent pay cut in the fourth quarter, said there was “no reason” not to create international travel bubbles with some countries, with airlines and airports well-positioned to enforce strict protocols.
Flight Centre has not provided a guidance this financial year, citing uncertainty around government travel restrictions.
Despite having a strong balance sheet pre-COVID the company moved to cut its $230m monthly outgoings by 70 per cent - $1.9bn in annualised savings.
It raised $900m in April and then secured $200m in July through the $62m sale of its Melbourne headquarters and a UK Government loan to extend is liquidity.
Flight Centre is also expected to benefit between $40m and $50m through an extension to the JobKeeper payment.
About 70 per cent of its workforce, 14,000 workers, are expected to remain stood down for the rest of the year despite some European countries and North America re-opening.
Flight Centre’s corporate business recorded a $74m underlying profit.