Travel Agency Flight Centre to Shutter 800 Storefronts as Part of $1.2 Billion Savings Effort

Flight Centre Travel Group plans to close 800 retail stores, among other measures, in a bid to slash costs over the coming months. Some 40 percent of those closures involve agencies based in Australia.

It said a raft of actions could save it $1.2 billion, while it also seeks to raise $425 million through a new equity raising or offer.

The latest crisis plan follows a staff reduction of 6,000, including redundancies, out of its workforce of 20,000.

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Among other measures taken, it has put a hold on all "non-essential capital expenditure", which it said will lead to monthly operating savings of $40 million per month.

Meanwhile, it could sell its Melbourne head office, valued at $37 million.

The group has also frozen sales and marketing activities, with the latter saving it nearly $11 million per month.

All of these operational cutbacks will incur a one-off cost of $127 million.

Liquidity boost

Flight Centre will also lean heavily on its banks, seeking $120 million of new commitments negotiations.

The update to the Australian Securities Exchange also noted that despite the crisis, last month it won new corporate travel accounts with annualized spend of $150 million.

Flight Centre has meanwhile requested the suspension of the trading of its shares until Wednesday, "in relation to the outcome of the proposed equity raising and the commencement of normal trading".

In an announcement, the company said: "Flight Centre has implemented a comprehensive package of initiatives to ensure it has the balance sheet flexibility and liquidity to trade through a prolonged period of disruption to the travel industry."