Troubled travel group Flight Centre has warned investors of a multi-million-dollar loss ahead of its financial results, flagging the coronavirus pandemic is still inflicting pain upon the tourism-dependent business.
The Queensland-based company is anticipating a statutory loss between $825 million and $875 million from direct impacts of COVID-19 grounding the travel and tourism industry.
Flight Centre’s expected shortfalls are off the back of the economic downturn sparked by the virus, reducing the value of its assets that will be recorded as impairment charges.
The company has set aside $110 million for COVID-19-related costs, with the 2020 financial year loss a significant reversal on the 2019 net profit of $364.3 million.
Removing impairment charges caused by impacts of the virus upon its business, Flight Centre is anticipating an underlying loss between $475 million and $525 million, largely incurred from the company’s inability to operate during the height of lockdown measures.
Flight Centre managing director Graham Turner said COVID-19 had been “devastating” upon the aviation, travel and tourism sectors that underpin the company’s operations.
“Despite ongoing restrictions, revenue has now started to increase, particularly in Europe, and
we have surpassed our initial cashflow target, thereby extending our liquidity runway,” he said.
“There are, of course, further challenges to overcome, plus ongoing uncertainty around
government COVID-19 objectives and the strategies they will adopt in the near term to counter the virus’s effects.”
In an update to the Australian Stock Exchange on Thursday, Flight Centre said it had obtained further debt funding to support the business, which equates to an additional $200 million in liquidity.
The company recorded a net operating cashflow of $53 million and said it had a cash balance of $1.9 billion.
Mr Turner has also called for greater clarity from government surrounding lockdown measures and border restrictions.
“Within the travel and tourism sectors, we need to know what COVID-19 conditions need to be present in each state, territory and at a national and international level for governments to ease restrictions, stop lockdowns and open borders,” he said.
“This will allow businesses to plan for the future, to prepare to restart their operations and to bring back thousands of our people who are currently on stand-down.”