Flight Centre guidance withdrawn, 100 stores to close

Flight Centre (ASX: FLT) shares were down 11 per cent at the time of writing after the travel agency suspended guidance due to coronavirus uncertainty.

The company had previously forecast underlying profit before tax (PBT) between $240-$300 million.

Although total transaction value (TTV) is in line with trends for the half, the virus's spread and the subsequent increase in travel restrictions have made it more difficult to predict the full-year impact or a timeframe for recovery.

The announcements coincided with Flight Centre's (ASX: FLT) decision to close 100 underperforming stores, with plans to transfer transactions and staff to other shops while investing in new models.

Managing director Graham Turner says Flight Centre will draw on its experiences with SARS in 2003 and during the Global Financial Crisis in 2009 by seeking to stimulate demand, while also implementing sensible cost reduction strategies to maintain its balance sheet strength.

"While people are still booking travel in February, our TTV actually increased slightly globally compared to the same month last year we are now seeing significant softening and expect this to continue into April at least," says Turner.

"Within this uncertain environment, 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.

"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."

Updated 10:50am AEDT on 13 March 2020


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