Flight Centre sales drop by 95 per cent in April

Flight Centre sales drop by 95 per cent in April

Sales at travel agency group Flight Centre (ASX: FLT) dropped to just five to 10 per cent of normal levels during April due to COVID-19 travel restrictions.

The small amount of sales the company is processing are coming from China according to managing director Graham Turner.

"There has been some ongoing activity in most countries and we are seeing a slight uptick in bookings in countries like China as travel and trading restrictions ease," says Turner.

"The timeframe for this recovery remains unclear, but we anticipate an increase in activity in countries like Australia as soon as interstate borders reopen, which we expect will happen in the coming months.

"Given that domestic travel represents roughly half of the leisure tickets that we normally issue in Australia and the overwhelming majority of our corporate volume, we are well placed to play a positive role in the recovery and are keen to work closely with local tourism bodies, airlines and other suppliers in the coming months."

The announcement comes as the group announces its cost reduction plan will be cheaper than expected.

Flight Centre says it is making significant progress in reducing its global cost base towards a $65 million per month target by the end of July 2020 and it now expects the plan can be executed with less than the $210 million in one-off costs that it originally anticipated.

The company anticipates a net positive cash impact from developments since April 6 which include the likely sale of its Melbourne head office property and government support initiatives in Australia and other countries.

Over the weekend Flight Centre announced it had changed its refund and cancellation policy for travel cancelled due to the COVID-19 pandemic.

The travel operator will refund thousands of customers who, from 13 March, were charged $300 per person to get a refund for a cancelled international flight or $50 for a domestic flight.

This policy will also apply to cancellations fees charged by Aunt Betty, Travel Associates, Student Universe, Universal Traveller and Jetescape Travel (trading as Byojet Travel), which are part of the Flight Centre group.

Chair of the Australian Competition and Consumer Commission Rod Sims has welcomed Flight Centre's change of heart.

"This is a very welcome move made by Flight Centre for thousands of customers impacted by COVID-19 travel cancellations," Sims said.

"We are continuing to discuss issues in relation to refunds and cancellations with the travel sector, and encourage travel providers to treat consumers fairly in these exceptional circumstances."

"While we know some consumers are very concerned about getting a refund or credit for their cancelled travel plans, we do ask people to be mindful of the significant impact that this pandemic has had on the travel industry."

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