Flight Centre asks staff to cut working hours as the coronavirus hits its bottom line

Flight Centre staff are being asked to cut their hours or take unpaid leave as execs offset the impact of COVID-19. 

Flight Centre staff members were asked reduce their workload by one day a week to ­alleviate the “significant” downturn caused by the outbreak. Picture: Supplied

Flight Centre employees are being asked to drastically cut back their working hours or take unpaid leave as executives scramble to ­offset the devastating financial impact of COVID-19. 

In an internal email sent to the company’s 10,000 employees, staff members were asked to reduce their workload by one day a week to ­alleviate the “significant” downturn caused by the outbreak.

“Staff can work a four-day week rather than five days with their salary reflective of this change,” the email said.

“All staff have been offered the opportunity to reduce their FTE (full-time equivalent) by one day per week or fortnight.” 

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In the email, the company conceded the impact of the deadly virus had been “significant” and said if employees heeded the appeal to cut back on hours it would “make a big difference”.

The travel agency’s contingency plan was activated on Wednesday. All eligible employees have been asked to book and take a minimum of one week’s ­annual leave before June 30, and optional unpaid leave is also available.

The move comes as global air travel is increasingly grinding to a halt, forcing the travel industry to reckon with the mounting cost of cancelled flights, lost sales and substantial reductions in services.

And like the rest of the tourism industry, the rapid spread of the virus has rattled Flight Centre and led to a sustained collapse in bookings to China and the rest of Asia, including Hong Kong, Japan and South Korea. 

Last month, Qantas outlined its plans to ask staff to take paid leave owed to them and freeze recruitment as it slashed services in ­response to the COVID-19 crisis.

Flight Centre, however, has sought to allay concerns about the virus and its toll on the travel agency’s thousands of employees. 

“Given our strong cash balance and relatively low debt, we are better placed than most companies to deal with the challenges,” Flight Centre spokesman Haydn Long told The Australian.

“It is clear, though, that travel demand will be softer than normal over the next few months, which is why we are keeping a close eye on costs.”

However, analysts say that in a worst-case scenario, the company could be forced to pursue a round of staff redundancies.

“They are at the forefront of this disruption, so it’s no surprise they are not faring very well. And, obviously, if things really do turn dire, they will have to respond,” said Brian Han, a senior equity analyst at Morningstar.

“We will only know the extent of the damage once it’s over, but profit is already expected to be down 18 per cent for this year ­compared to last year.”

However, he stressed that Flight Centre — and its competitor Helloworld Travel – were both considerably “battle hardened” in the wake of SARS, the global ­financial crisis and Brexit.

“Management aren’t the type to make irrational decisions, so the first priority is to mitigate as much as possible and weather the virus until it dies down,” he said.

IBISWorld senior industry analyst Tom Youl said Flight Centre had borrowed from Qantas’s playbook as it sought to navigate “uncharted territory”.

“It closely mirrors the strategy undertaken by Qantas by asking a range of staff to take leave,” he said. “One thing they can do to ­reduce pressure on the balance sheet is to cut wage costs.”

And as unease grows among frontline staff over the deepening impact of the virus, the company has already started to aggressively discount flights in a bid to claw back customers. Return economy flights from Sydney to San Francisco are being offered for a low of $729 in April and May.

In February, Flight Centre managing director Graham Turner said part of the coronavirus strategy would rest on marketing “safe destinations”, such as New Zealand and the South Pacific.