Flight Centre’s $850 million loss as travel industry suffers from COVID-19 downturn

Travel group Flight Centre has reported an eye-watering loss as the global pandemic continues to paint a bleak outlook for the travel industry.

Flight Centre has reported a staggering loss as the ongoing coronavirus pandemic continues to paint a bleak outlook for the global travel industry.

The embattled Queensland-based travel group has posted an eye-watering loss of $849 million for the 2020 financial year, with the entirety of the financial woes a direct result from coronavirus pandemic restrictions in March through to June.

The loss is a complete contrast to the company’s 2019 financial performance that booked a profit of $349.5 million.

Flight Centre said forecasts of a recovery in the current financial year remain uncertain while government restrictions remain in place for international and domestic tourism.

The loss is a complete contrast to Flight Centre’s 2019 financial performance – a $349.5 million profit. Picture: Josh Woning/ AAP

The company noted its corporate travel business was better placed to recover than its retail leisure business, as it has a greater reliance on domestic and regional travel. Its leisure business is heavily weighted to overseas flights and travel packages.

Flight Centre managing director Graham Turner said the coronavirus pandemic had created the most challenging operating environment in the company’s 40-year history.

“Until the past four or five months, we had not seen – and could not have imagined – a scenario in which virtually all flights and travel plans globally would effectively be grounded for an extended period,” he said.

“This extraordinary trading environment has already had a devastating impact on businesses and on people, particularly those in the aviation, travel, tourism and hospitality sectors, with tens of thousands of jobs lost in Australia alone and many businesses struggling to survive.”

Flight Centre managing director Graham Turner said the virus had created the worst operating conditions in 40 years. Picture: Liam Kidston

Flight Centre has obtained $1.1 billion in additional liquidity to ride out the financial storm sparked by the virus. The additional funds are mostly from a $700 million sharemarket capital raising and an increase in its debt facility of $200 million.

“Travel is starting to gradually recover in locations like North America, Europe and South Africa, where domestic borders are now open, although we are also seeing heightened restrictions in Australia and New Zealand, after earlier relaxations,” Mr Turner said.