Flight Centre closing 428 Aussie stores
Ailing travel firm Flight Centre will permanently close 40 per cent of its Australian stores by the end of July as the economic fallout from the deadly COVID-19 pandemic escalates.
In an announcement today, the company revealed the new closures were part of an effort to reduce annual costs by $1.9 billion.
It involves the closure of half its global shopfronts, and around 428 of Flight Centre's 944 Australian stores.
Around 6000 support and sales staff have been stood down temporarily - or in some cases, made redundant - out of the company's 20,000-strong workforce.
Other expenditure has also been cut back, and the company is considering selling off its central Melbourne office.
Managing director Graham Turner said the coronavirus had sparked the worst crisis to hit the business in decades.
"It is, without question, the most challenging period we have encountered in over 30 years in business and it is inevitable that some businesses across our industry will fail, given the significant loss of revenue that they will be experiencing now and for at least the next few months," Mr Turner said.
Flight Centre is also asking investors for $700 million to help the company ride out the pandemic which has halted most of the global travel industry.
It has already locked in a $200 million loan from investors, bringing the capital-raising exercise to $900 million.
The company's total transaction value was down by between 20 and 30 per cent last month, with further declines expected in the coming weeks as travel restrictions continue.
It said this "very low revenue environment" was likely to continue in the short term as the coronavirus outbreak continued to spread.
But Flight Centre insisted it "remains a leading global travel and tourism company with strong brand recognition and customer loyalty across our Corporate, Leisure and Online platforms", which meant the company was "positioned to take advantage of the recovery in travel and leisure markets globally".
Just last month, Flight Centre announced the shock closure of 100 Australian stores as the coronavirus crisis took hold.
"While people are still booking travel - in February, our TTV actually increased slightly globally compared to the same month last year - we are now seeing significant softening and expect this to continue into April at least," Mr Turner said at the time.
"Within this uncertain environment, our priorities are to reduce costs, while also ensuring that we and our people are ready to capitalise when the steep discounting that is underway across most travel categories starts to gain traction and as the trading cycle rebounds.
"As we saw with both SARS and the GFC in Australia, the rebound can be relatively fast and strong after a fairly significant downturn in international travel."
Originally published as Flight Centre closing 428 Aussie stores