3 things we learnt from Flight Centre’s coronavirus Response Plan
Though Flight Centre’s stock remains voluntarily suspended, we examine some of the key things revealed in the company’s Covid-19 Response Plan announcement.
As entire economies grind to a halt, companies are being forced to quickly respond to a dynamic and ultimately still-uncertain business and economic environment.
Airline and travel companies and their employees have been particularly impacted by the coronavirus crisis – as governments across the globe take unprecedented measures to restrict travel – both internationally and domestically.
In response to this situation, Flight Centre – which has already faced significant disruption to its travel-focused business operations – today released details around its Covid-19 Response Plan.
Though the broad strokes of this plan are relatively simple, with the company aiming to focus on cash, costs and liquidity, the implications of its plan are anything but.
Job cuts in focus
Centrally, some 6,000 jobs will be lost either temporarily or permanently, with Flight Centre noting that pre-coronavirus staffing levels are no longer sustainable. Amongst these job losses, approximately 3,800 Australian staff will be stood down in the short-term.
Though of little consolation for workers currently, the company indicated that its 'intention is to return stood-down people to workforce when restrictions are lifted & demand increases.'
Cash remains king and liquidity all-important
Revealing a number of initiatives to preserve cash, as part of today’s announcement FLT further noted that its $15 million monthly sales and marketing spend has been paused, in addition to a number of other 'non-essential projects.'
Secondly, and speaking to its current liquidity position, the compant stressed that it 'is undertaking steps to ensure it retains a robust balance sheet and liquidity position to enable it to manage through the current crisis.’
The company said that it would report on the progress of these steps in due course, at which point FLT would also likely see its stock lifted from its current voluntarily imposed suspension.
Lift or not, between late February to mid-March, Flight Centre saw its share price collapse – falling over 70% in that period, as investors sought to protect their capital from industries most impacted by the Covid-19 crisis.
Prior to its pause in trading, trading halt and finally suspension from official quotation, FLT traded at the $9.91 mark – well off its 52-week high of $49.14 per share.
Management commentary: the outlook
Finally, speaking of the current situation, Flight Centre’s Managing Director, Graham Turner said:
'We will also be conscious of the need to make changes that allow us to successfully overcome this short-term challenge, but do not harm our culture or prevent us from thriving into the future.'
Mr Turner finished by pointing out that:
'We and our people remain committed to looking after our customers – both during this difficult period and beyond and will continue to be available through our leisure shops and corporate offices (where permitted), our websites, via social media and through our mobile capabilities during this time of social distancing.’
How to trade travel and airline stocks
Though Flight Centre remains in a voluntary suspension – with market volatility at all-time-highs – there remain other opportunities for investors to take advantage of. For example, you can use CFDs to trade airline stocks like Qantas and Sydney Airport, long or short through IG’s world-class trading platform.
For example, to buy (long) or sell (short) Qantas using CFDs, follow these easy steps:
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets