Flight Centre will close 100 stores across Australia in response to the coronavirus.
In a statement to the Australian Securities Exchange, the travel company said the “virus’s spread and increased travel restrictions mean demand is softening significantly and [the] timeframe for recovery is unclear”.
The number of job losses is unclear.
CEO Graham Turner said it was a tough time for the travel and airline industries but the closures were inevitable.
“A lot of this is just business as usual, leases come up and we find the location is not as good as it used to be and we close them — that’s been happening forever,” he said.
“We will be opening some shops as well when new shopping centres come up but the net effect will be about 100 shops [will close] over the next 12 months, and a reasonable number of them will shut in the next four or five months.
“We’ve got just under 900 locations in Australia, so it’s about 10 per cent of our locations and they’re all in areas that are not as good as they used to be.
“It would have happened anyway … the coronavirus just makes it that we’ll shut them a little bit sooner than we would have otherwise.”
Mr Turner said the company would look to transfer staff to other shops but couldn’t rule out job losses.
“Certainly at the shop front we intend to transfer all the consultants into nearby shops ,” he said.
“They will all be assured relocation if they want to but obviously in these sort of times we can’t guarantee that everyone in Flight Centre Travel Group are going to with us forever and ever.”
He said the financial impacts from the virus will continue into April.
“We’ve got $1.3 billion in cash on our balance sheet so we’re feeling fairly strong, but there’s no doubt in the airline, tourism and travel industry it’s going to be a tough few months,” Mr Turner said.
“In February our sales were still up globally but we expect a decrease in March and April but things may start to recover late April, May.”
The company said it was implementing other short-term strategies including:
- introducing flexible work arrangements to allow staff to switch from full time to part time
- reduced trading hours in some remaining stores
- staff encouraged to take leave during a slowdown tipped for March and April
- a recruitment freeze, and
- deferral of some non-essential projects and capital expenditure
The company said executives would also go without performance bonuses.
Mr Turner said the company would draw on its experience in getting through the SARS outbreak and the global financial crisis (GFC).
“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,” he said.
Flight Centre’s headquarters is located in South Brisbane.
Today Queensland Health confirmed eight more cases in that state taking the total number to 35.
Authorities have also estimated almost 3,000 people are in self-isolation at home.