Coronavirus: Flight Centre to close up to 100 shops in Australia

Coronavirus: Flight Centre to close up to 100 'low-performing' shops.
Flight Centre started as one single shop in the 1980s. Photo credit: Getty

Flight Centre is closing up to 100 'low-performing' Australian stores and is withdrawing its earnings guidance as the travel industry is hammered by the coronavirus pandemic.

The retail travel agency, part of the Flight Centre Travel Group, is the largest in Australia.

With 140 retail shops in New Zealand employing 1200 staff, it's also Aotearoa's largest travel agency.

David Coombes, managing director Flight Centre NZ, confirmed to Newshub "in New Zealand, there are no plans to close any locations". 

"Having said that, these are challenging times, and our travel experts are working around the clock to provide support for our customers," said Coombes.

"Kiwis are renowned for their resilience and thirst for travel like no other nationality - there's very little that stops us from exploring the world."

The company has not said which spcific stores will close in Australia, but that it is looking to transfer staff to other shops "while continuing to invest in new and emerging models".

Flight Centre Travel Group Limited shares fell 12.5 percent on Friday morning on the Australian Securities Exchange (ASX). 

The company announced it had "today suspended its 2020 fiscal year guidance following heightened uncertainty surrounding the coronavirus," in a statement supplied to the (ASX).

It added that the total transaction value trends were "generally in line with expectations", but that the "virus's spread and increased travel restrictions mean demand is softening significantly and the timeframe for recovery is unclear".

The store closures will be part of what the company is calling a "strategic response" to the impact of the COVID-19 pandemic.

Flight Centre Travel Group managing director Graham Turner said the company is "well placed to overcome challenges".

"As we saw with both SARS and the (global financial crisis 2007-2008) in Australia, the rebound can be relatively fast and strong after a fairly significant downturn in international travel," said Turner.

"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."

The company said it had an AU$189million positive net debt position at February 29, which included AU$403.2 million in general cash and investments and AU$213.9million in debt.

On top of that it says it has "access to additional liquidity" and undrawn debt facilities in the order of AU$80million.