Flight Centre slashes prices as coronavirus infects bookings

Travel agency Flight Centre will aggressively discount domestic, British and northern European flights and holiday packages.

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

Travel agency Flight Centre will aggressively discount domestic, British and northern European flights and holiday packages in a bid to mitigate large falls in bookings due to the coronavirus.

“One thing for sure is once we know a bit more about the virus we will be aggressive in marketing what are perceived as safe destinations, such as New Zealand, South Pacific and the United States,” said Flight Centre managing director Graham Turner, announcing the travel agency’s half yearly results yesterday.

Flight Centre is already selling return economy flights from Sydney to San Francisco for an unprecedented $729 in April and May.

Like the rest of the tourism industry Flight Centre has sustained a collapse in bookings to China and the rest of Asia, including Hong Kong and Japan.

“It’s mainly been Asia were the drop-offs are. People are being more conservative,” Mr Turner said.

Asked if his clients were choosing higher-quality seats in the wake of the virus, such as premium economy, business and first class, Mr Turner suggested that having greater separation from other passengers was probably a good idea.

Mr Turner said he did not think the Australian dollar, which is trading at around US65c, would dive any lower.

He did not think the dollar would be much worse off than other currencies.

Releasing first-half results, Mr Turner said Flight Centre had produced record sales but its statutory first-half pre-tax profit was $38.8m, compared with $127.4m the previous corresponding period.

The company incurred one-off expenses of $63.9m, including a $46.1m writedown on its underperforming London-based Global Touring Business, and $7.1m in non-recurring costs associated with its decision to assist holiday-makers who had booked with the collapsed wholesalers Tempo and Bentours in Australia and New Zealand.

Flight Centre produced a record total transaction value of $12.4bn for the first half, its strongest growth rate since the 2016 financial year.

The record TTV was produced in all geographic segments in both leisure and corporate despite challenging trading conditions.

One of Flight Centre’s better peformers was its corporate travel sector which has won a five-year, $US1bn contract with a yet-to-be-named US-based manufacturing client.

“In the $US1.5 trillion global corporate sector, we have strong momentum and strong future prospects, given our rapid growth and relatively small share of extremely large markets like Asia, Europe and the Americas, which has become our largest corporate business globally,” Flight Centre said. South Africa, Singapore, the United Arab Emirates, Europe and the Middle East all achieved record results.

Flight Centre declared a 40c fully franked interim dividend payable on April 17. The shares closed 72c lower at $34.28.