Flight Centre’s COVID hit

FLIGHT Centre (FLT) will report a loss of $825m-$875m for the year to 30 Jun, with the result highlighting the massive impacts of border closures and travel restrictions on the company’s operations (TD breaking news).

The large deficit includes oneoff restructuring costs as staff have been made redundant, as well as the impact of supplier failures, impairment charges and write-offs against goodwill, shop fixtures and software assets.

The result is more than $1.2 billion lower than the $364 million profit reported last year.

CEO Graham Turner said the company currently had about $1.15 billion in liquidity, and had significantly beaten its cost reduction targets in Jul to record $53 million in monthly spending.

Sales have also been stronger than initially expected, with total transaction value exceeding $200 million globally for the month and almost $100 million in Australia.

“To date, FLT’s corporate travel businesses have predominantly fuelled the company’s revenue generation during the COVID-19 lockdowns, given that essential services have generally been permitted to travel,” Turner said.

On the leisure side, revenue generation had “generally been more subdued,” he said, with low consumer confidence and heavier travel restrictions imposed.

About 70% of Flight Centre staff globally have either been placed on government stand-down or furlough programs, or their roles have become redundant with customers prevented from travelling and no visibility around timeframes for restrictions lifting.

The company intends to “extend its runway” by increasing revenue as borders open and/or travel bubbles are formed, and an “ongoing, targeted cost focus” particularly in leisure operations.