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The travel sector is reeling from flight bans and cancelled events due to the coronavirus outbreak, with travel agencies and airlines withdrawing their financial forecasts and slashing their operations.
On Friday, travel agencies Flight Centre and Corporate Travel Management both withdrew profit forecasts issued less than a month ago, with Flight Centre saying it would be closing about 100 of its outlets in Australia.
Second-tier airline Virgin also withdrew its financial forecasts and announced cuts to its domestic and international flights at the same time as revealing one of its cabin crew had contracted Covid-19.
Australia’s flag carrier, Qantas, slashed international flights by a quarter earlier in the week.
Flight Centre told the stock exchange it withdrew a forecast, issued only a fortnight ago, that the coronavirus outbreak would reduce profit for the second half of the year by as much as $90 million.
It said that while sales had been in line with expectations, “the virus’s spread and the subsequent increase in travel restrictions had made it more difficult to predict the virus’s likely full year impact or a timeframe for recovery”.
The company said it will close up to 100 “underperforming” stores – or about 10 percent of its network and staff will be redeployed “to fill existing vacancies in other shops nearby”.
“While people are still booking travel – in February, our [total transaction value] 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,” managing director Graham “Skroo” Turner said.
“As we saw with both Sars and the [global financial crisis] in Australia, the rebound can be relatively fast and strong after a fairly significant downturn in international travel.”
Virgin chief executive Paul Scurrah said more tough decisions could lie ahead for the airline, as demand sinks amid the coronavirus crisis.
But he said the airline was not in any danger of folding.
“We have taken strong action to mitigate the risks of coronavirus today,” he said on Friday.
“However, if further hard decisions are required, we will make those hard decisions.”
He said health authorities are tracing passengers who came into contact with a cabin crew member who tested positive for Covid-19 after returning from overseas.
But Scurrah wouldn’t reveal which flight or flights are of concern, and cited the woman’s privacy in refusing to say if she had been on a Gold Coast to Sydney flight.
“We are not confirming the flight this cabin crew was on … It is a matter of privacy.”
Virgin Australia will cut domestic capacity by 5 percent in the second half of the financial year ending June. It will also reduce its international capacity by 8 percent.
Services to be reduced include flights from Brisbane to Tokyo and Sydney to Los Angeles, while some flights from New Zealand to South Pacific locations will stop altogether.
Virgin had already dropped its flights to Hong Kong.
Domestic services to be cut are mainly in markets that have multiple daily runs.
Internationally, daily services between Brisbane and Tokyo’s Haneda airport will fall to three times a week from March 29 until May 3.
Daily services from Sydney to Los Angeles will drop to five times a week from early May to early June, and services to New Zealand will also be cut further.
Services from Auckland to Tonga and Rarotonga in the Cook Islands will also cease in May and July respectively.
Friday’s international changes follow the group’s recent withdrawal of its Hong Kong services.
Corporate Travel Management, a Brisbane-based corporate travel agency that has been heavily targeted by short-sellers, said it no longer stood by its 19 February forecast that the virus outbreak would cut earnings by up to $40m.
It said the financial impact of the virus was bigger than expected due to new travel bans, including Donald Trump’s decision to ban travel to the US from most of Europe, and corporates continuing to slash business trips.
“The significant uncertainty makes it difficult to reliably predict future activity,” the company told the Australian Securities Exchange.
The agency said its directors and boss Jamie Pherous will take a 20 percent pay cut due to the pandemic.
On Thursday, the cruise operator Carnival announced it would halt the journeys of all ships in its Princess Cruises line for two months.
Carnival, the world’s largest cruise company, said it would voluntarily pause all 18 vessels which sail under the Princess Cruises brand, affecting all voyages departing between March 12 and May 10.
Shares in the company plummeted by 17 percent on the London stock exchange, to £18, while its US shares were halted in pre-market trading. In January, the shares were changing hands at nearly £52.
The president of Princess Cruises, Jan Swartz, said the company had taken the decision in order to reassure passengers, employees and investors.