Flight Centre hit by $510m loss in 2020
Global travel business Flight Centre has described the past six months as the most challenging trading environment it had ever experienced, signalling a $510 million loss for FY20.
Flight Centre managing director Graham Turner said the business couldn’t have imagined a scenario where virtually all global travel plans are grounded until the Covid-19 pandemic, and that it has taken its toll on the business.
“This extraordinary trading environment has already had a devastating impact on businesses and on people,” Turner said.
“We were forced to make some very tough decisions as this crisis unfolded, but we were very fortunate to be able to draw on our strong balance sheet.”
Turner said the travel retailer has the capacity to service about 40 per cent of its normal business, “which means we will be able to reach a break-even position without incurring significant additional expenses”.
However, its leisure business is heavily weighted toward international travel, and while travel in some parts of the world is beginning to return to normal the increased restrictions in Australia and New Zealand are worrying.
“In the near-term, TTV is likely to be domestic and corporate travel weighted, given that heavy restrictions still apply to international travel, although we are seeing some travel bubbles or corridors open as countries learn to live with the virus,” Turner said.
And while this demand uplift has been welcome the ongoing border closures are hampering an industry-wide recovery, the business said, making it difficult to provide market guidance into the next financial year.
However, Flight Centre believes demand for international travel will not recover fully until FY23/24, and it expects more travel bubbles to surface and business and governments to work together to develop re-opening strategies.
This article was first published on Inside Retail, a sibling website to Inside Franchise Business Executive.