Coronavirus: Flight Centre stands down 3,800 Australian workers

Flight Centre chief Graham Turner says the company thinks it can survive for a least a year if flights don’t resume.

Coronavirus has thrown travel plans into disarray, and Flight Centre is one of the victims. Picture: Britta Campion

Flight Centre will cut 6000 jobs from its global workforce and close 250 of its retail shops in Australia, as it grapples with COVID-19, while Virgin has said more than 1000 of the staff it has stood down this week will probably be made redundant.

Virgin Australia managing director Paul Scurrah on Thursday said the COVID-19 pandemic was “the worst airline crisis the world has ever seen,” a day after announcing his company would stand down to 8000 of its 10,000 strong workforce until at least the end of May.

Meanwhile, Flight Centre, which has seen its shares plunge from $40 to $50 six months ago to $10 at last close, is in trading halt for the next week as it attempts to raise cash.

“Any equity raising would be to make sure we have funds for the next 12 months and it will be substantial,” Flight Centre founder and managing director Graham Turner told The Australian on Thursday.

1 2 3 5 6

Asked how long Flight Centre stock will be suspended, Mr Turner said he had a couple of choices available but that he expected to resume trading within the next week.

“We have plans in place to make sure we survive for the next year or two without knowing when travel will resume. We’re taking a fairly conservative view. We are planning basically to be badly affected for the next nine months, (but) I would not be surprised to see domestic travel coming back in late June. I think the planes will be flying then, but we are not relying on that.”

“International travel will be later, it will take longer, because there are so many multilateral arrangements, there could be a level of normality by late July to August.”

Flight Centre’s total transaction value is down 20-30 per cent on normal monthly levels, leading the company to renegotiate its rental deals with landlords and institute a 50 per cent pay cut for senior executives and board members. Flight Centre’s $15 million monthly sales and marketing spend has been paused.

Flight Centre managing director Graham Turner. Picture: Liam Kidston.

Prior to the coronavirus, Flight Centre, which was employing 20,000 staff was on track to deliver record results. The company said it would reinstate staff as soon as government travel restrictions are lifted and travel demand is back.

Flight Centre said the never before seen government driven travel restrictions had led to the airlines grounding their fleets and the stoppage of the vast proportion of Flight Centre’s business.

Mr Turner said we have been through some tough times but nothing as bad as this.

“It will halve the economy with a shut down, the cure for controlling this virus is quite devastating to the economy.”

Mr Turner said it was difficult to say whether the federal government had overreacted with its travel ban saying it probably had no choice.

“Whether it’s the right strategy it’s pretty hard to know. They really had to follow the other countries. In some countries it has worked, in other countries (such as Europe) it hasn’t worked.”

All up about 6,000 support sales roles will be lost locally and globally either temporarily or permanently. This included 3,800 people in Australia who will be temporarily stood-down.

Flight Centre said the intention was to return its stood-down staff to work as quickly as possible once travel bans had been lifted and airlines were flying.