Flight Centre: Travel company to shut 100 underperforming stores

The popular travel agent has been hit hard by the coronavirus outbreak, blaming the pandemic for the devastating decision.

Flight Centre will shut down 100 stores across Australia as the fallout from the lethal coronavirus pandemic continues.

The travel agent made the shock announcement today that scores of its underperforming outlets would shut down.

However, the company did not confirm how many jobs were hanging in the balance, or which specific branches had been earmarked for closure.

In an announcement to the ASX this morning, Flight Centre blamed the dramatic raft of closures on “heightened uncertainty surrounding the coronavirus”.

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“Total transaction value (TTV) trends generally in line with expectations in early 2H trading but virus’s spread & increased travel restrictions mean demand is softening significantly and time frame for recovery is unclear,” the statement reads.

It confirmed a “strategic response plan” was in place which aimed to “protect and grow market-share ahead of future rebound, while reducing costs” and that there were “up to 100 underperforming leisure shops to close in Australia”.

Flight Centre said it was “looking to transfer TTV and sales staff to other shops, while also continuing to invest in new and emerging models” and that there was a “solid balance sheet, with $1.3 billion in total cash and investments and $189 million positive net debt position at February 29”.

It is not known how many jobs could be affected.

Travel companies have been particularly ravaged by the virus and the increasingly severe travel restrictions imposed by governments in a frantic bid to quell the spread.

Both Webjet and Flight Centre fell nearly 20 per cent on Thursday, while Virgin Australia was down 16.7 per cent.

Managing director Graham Turner said although the outlook and the time frame for recovery remained unclear, the company was well placed to overcome challenges.

He said the company would draw on its experiences with SARS in 2003 and during the Global Financial Crisis in 2009 by seeking to stimulate demand, while also implementing sensible cost reduction strategies to maintain its balance sheet strength.

“While people are still booking travel – in February, our TTV actually increased slightly globally compared to the same month last year – we are now seeing significant softening and expect this to continue into April at least,” Mr Turner said.

“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.

“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.”

The company has also introduced a range of other measures in light of the bleak current climate, including short-term flexible work arrangements for staff, reduced trading hours in some shops, reducing leave balances and encouraging employees to take time off during the quieter period, introducing a freeze on recruitment and deferring some “non-essential” projects and expenses.