Flight Centre closes hundreds of stores, flags more job cuts
FLIGHT Centre Travel Group will close half of its global stores and embark on a $700m capital-raising initiative in a fight for survival amid the coronavirus pandemic.
The Queensland travel behemoth, which has been decimated by the virus-caused travel shutdown, also flagged further job cuts among its 20,000-person workforce.
Flight Centre's total transactional value plunged 30 per cent in March and further falls are expected in the coming weeks as travel restrictions continue.
The South Bank-based company announced this morning it would aim to reduce its annual costs by $1.9 billion, with 50 per cent of its global stores shuttered and 6000 sales and marketing staff stood down or made redundant.
About 3800 Australian sales and support jobs are among the 6000 affected, and Flight Centre has flagged the likelihood of further cuts in the future.
Its Australian stores will be cut from 944 to 516, a 40 per cent reduction.
Sales and marketing spending will also be paused, saving the company $18 million each month.
Flight Centre will issue 97 million new shares as part of a $700 million placement and entitlement offer to raise cash and improve its balance sheet amid the pandemic.
The company said the package would ensure it was well-placed to survive the crisis.
"Flight Centre Travel Group plans to close more than 50 per cent of global leisure shops, including more than 40 per cent of Australian leisure shops," the company said in a statement.
"Flight Centre has moved to significantly reduce occupancy costs of the remaining retail network, by renegotiating rental agreements with landlords, discussions to date have been positive as Flight Centre Travel Group has pursued cost savings including rent-free periods and more flexible trading hours."
The sale of its Melbourne head office site is also being explored in a more which could generate $60 million.
Flight Centre said it had increased commitment from existing lenders to provide $200m in bilateral term facilities.
It is also assessing any support from the Australian Government's $130 billion JobKeeper package.
An environment with "very low revenue" is expected to continue in the short term, but Flight Centre says it is continuing to generate revenue through intrastate and mining industry travel as well as future holiday bookings.
The group has a $2.6 million liquidity buffer.
Originally published as Flight Centre closes hundreds of stores, flags new job cuts in fight to survive