Webjet lands $275m raising as staff cut by 20 per cent

Webjet is among the first wave of Australian companies to succeed in a capital raising and will claw $275m from the market.

Webjet managing director John Guscic Picture: Aaron Francis

Online travel agency Webjet is among the first wave of Australian companies to succeed in a capital raising and will claw $275m from the market.

But it has also announced plans to cut a fifth of its global workforce and axe its cruise ­division.

In a bid to further shave costs, Webjet managing director John Guscic is taking a 60 per cent pay cut and has deferred the company’s $1.2m interim dividend.

Proceeds from the capital raising, which could rise to as much as $331m if retail investors take up their pro rata rights within the next month, will fund Webjet’s operations for the remainder of the year. The majority of the raising through Goldman Sachs, Ord Minnett and Credit Suisse is fully underwritten.

Apart from axing its lacklustre cruise division, Webjet also made the tough decision to suspend its strongly performing holiday package offshoot, Webjet ­Exclusives, which it set up to take on online travel powerhouses such as TripADeal and Luxury Escapes.

“All of our markets have been shut down progressively over the past few months,” Mr Guscic told The Australian on Wednesday.

“Our revenue has dried up, we needed capital, we were one of the first Australian companies to fully consider all our options and we took the opportunity while our shares were in suspension to ­review all the capital raising options.”

Asked if Webjet could survive the coronavirus-led travel meltdown, Mr Guscic said: “Absolutely. We now have over $450m worth of liquidity.

“We are one of the first Australian companies to raise capital and secure Webjet’s future.”

Although Webjet considered several funding options, Mr Guscic said that in the end, after talks with major investors, “who supported us very strongly, we ­realised that a pure equity raise ticked all the boxes.

“Everyone who has supported Webjet over the years has the ­opportunity of participating in our recovery. It’s been incredibly well supported,” he said.

“This significantly enhances our balance sheet and ensures Webjet’s survival in 2020 and provides a benchmark for future success to capture the pick-up in travel activity when the global travel market recovers.”

Mr Guscic said he was ­incredibly grateful for shareholder support.

The more than 440 retrenchments from Webjet’s 2350-strong workforce were planned across Webjet’s 30 offices in 26 countries.

Under the cost-cutting measures, most of Webjet’s remaining staff will work four days a week while the company has frozen all non-essential spending, including advertising and marketing, which will save it about $13m a month.

Rival Helloworld recently made a similar decision, cutting all advertising and marketing, saving about $15m a month.

The entitlement offer invites eligible shareholders to subscribe for new shares on a one-for-one basis, at an offer price of $1.70 per new share.