Travel agency Flight Centre will close 100 outlets across Australia and has scrapped its earnings guidance to try to soften the financial hit from the escalating coronavirus outbreak.
Staff will also be encouraged to take leave or switch to part-time work, while executive bonuses will be cut as the travel retailer reels from the virus fallout.
Flight Centre said on Friday that affected “underperforming” branches would close before June 30.
Affected staff will be transferred to other outlets, as part of a wider set of cost-cutting moves by the agency.
Flight Centre brands include Escape Travel and Student Flights.
Managing director Graham Turner said reducing costs was priority in an uncertain environment.
He reported significant softening in bookings, which he expected to continue into April at least.
“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,” Mr Turner said.
“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.”
Management told the sharemarket that while early trends had been in line with expectations, the coronavirus’ spread and widening travel restrictions made it more difficult to predict the full-year impact.
“Given this uncertainty, the company has elected to suspend its revised FY20 guidance,” Flight Centre said.
The guidance on February 27 was full-year profit before tax of $240 million to $300 million, down from the previous range of $310 million to $350 million.
On that day, Flight Centre announced an after-tax profit for first half of the financial year of $22.1 million – having collapsed from $85 million for the same period in 2019.
In Friday’s ASX announcement, the company said its directors would also forgo 30 per cent of their fees for the remainder of the financial year.
Trading hours will be cut at some branches, and staff will be encouraged to take leave.
Recruitment will be suspended, and non-essential projects deferred.
The company will also focus its marketing on destinations considered to be lower risk – such as South Pacific and domestic holidays.
Flight Centre shares were down by 17 per cent in morning trade. They have lost 60 per cent of their value since February 20 amid a wider market sell-off.
The travel industry is one of those hardest hit by the virus and travels bans.
Many people have cancelled travel, prompting airlines and other businesses to cut the number of flights and services.
On Friday, Virgin Australia joined rivals Qantas and Air New Zealand in reducing capacities for international and domestic flights more than once in quick succession.