Flight Centre to close 100 stores in an effort to cut costs

Flight Centre will close 100 branches across Australia and has scrapped its earnings guidance as it grapples with the escalating coronavirus outbreak.

In an announcement to the ASX, Flight Centre said that affected “under-performing” branches would close before June 30.

In a move mirroring the major airlines, executive bonuses will be cut by 30 per cent, while staff will also be encouraged to take leave or switch to part-time work.

“Within this uncertain environment, our priorities are to reduce costs, while also ensuring that we and our people are ready to capitalise when the step discounting that is underway across most travel categories starts to gain traction and as the trading cycle rebounds,” said managing director Graham Turner.

“As we saw with both SARS and the global financial crisis in Australia, the rebound can be relatively fast and strong after a fairly significant downturn in international travel.”

Turner said there was a significant drop in bookings, which he expected to continue into at least April.

“Given this uncertainty, the company has elected to suspend its revised FY20 guidance,” he said.

Flight Centre’s share price has dropped to around $16 in Friday’s trading, compared with $43 a year ago.