Webjet, Helloworld pull guidance as CEOs take pay cuts

Webjet and Helloworld have pulled full year earnings guidance and announced executive pay cuts.

Webjet managing director John Guscic. .

Webjet and Helloworld have both withdrawn full year earnings guidance for 2020 with executives at the two ASX-listed travel companies taking immediate pay cuts.

Helloworld chief executive Andrew Burnes said he would take a 30 per cent pay cut for the remainder of the financial year, while the group’s chairman and non-executive directors will take no fees during the period.

“Over the last two weeks we’ve seen a steady decline in bookings in some parts of our business, particularly cruise, inbound to Australia, wholesale to Asia and Europe and in corporate international travel,” Mr Burnes said.

Helloworld announced the measures after rival Webjet’s managing director John Guscic earlier announced that he and the board of directors would take an immediate 20 per cent pay cut in a bid to shore up its balance sheet amid the spread of coronavirus.

“There has been a material escalation in cancellation rates of near-term travel and a reduction in overall travel booking activity,” Webjet said in a statement to the ASX.

“While forward bookings beyond three months remain in line with previous expectations, cancellations are now occurring at short notice prior to travel and therefore reducing visibility on future earnings. As a result, there is insufficient insight into future performance to maintain earnings guidance at this time.”

Webjet's full-year guidance was issued on 19 February, while Helloworld issued its full guidance on 24 February.

The decisions by both travel companies follow a slew of airline cutting the volume of flights and 2020 guidance.

On Monday, Air New Zealand withdrew its guidance due to the global disruption caused by the infectious disease.

Qantas chief executive Alan Joyce on Tuesday, said he would not take a pay cheque for the next three months, while the airline attempts to soften the blow caused by the virus.

Mr Guscic said Webjet’s momentum was well ahead of the market prior to the outbreak and is taking careful steps to mitigate its impact.

“Webjet is taking careful steps to mitigate the impact of COVID-19 including the implementation of a company-wide cost reduction program to minimise operating expenditure, which is expected to result in $10m in savings for the remainder of FY20,” the company said.

“Other initiatives are being implemented to ensure the company retains its strategic and competitive advantage when conditions normalise.”

Helloworld said it would also halt non-essential recruitment, ask employees to take paid or unpaid leave and reduce or eliminate all discretionary spending.

Mr Burnes said the response was due to anticipated lower demand in the first and potentially the second quarter of the next financial year.

“We’re in a good position to see this through but like so many businesses in tourism and other industries we need to take steps to right size our operations for the journey ahead,” Mr Burnes said.

“Who knows how long this will go on but it will eventually get better and the world will recover and we want to ensure we are well positioned when that happens to meet the leisure and corporate travel demands of our customers in Australia, New Zealand and around the world.“