This article is from the Australian Property Journal archive
EMBATTLED travel group Flight Centre will shutter another 90 stores nationwide as domestic and international movement remain heavily restricted due to the pandemic.
The latest round of closures follow the group shutting 428 of its 944 Australian stores earlier this year, including those in its Travel Partners, Student Universe and Travel Money networks, as well as laying off about 4,000 staff.
About 400 Australian stores will remain from the 944 going into 2020. The group reiterated that lowering occupancy costs through rent reductions and shop rationalisation will be part of cost reduction strategy, while about 70% of its global workforce has been stood down or made redundant.
It has also closed 371 out of its 593 overseas stores.
Flight Travel believes demand for international travel, its leisure business’s primary revenue source, will not fully recover before the 2023 or 2024 financial years in the absence of an effective vaccine.
Yesterday’s announcement, which came with the group’s annual report, causes more headaches for retail landlords. Many have already had to come to cop lower rental income from struggling tenants. A recent Deloitte Access Economics report warns extending the code of conduct could cost commercial property landlords as much as $14.9 billion, far exceeding any state or territory governments COVID-19 cash support.
At current staffing levels, a net benefit of about $70 million to $80 million in additional subsidies will be received from July through to the end of March via JobKeeper and the extended JobKeeper program.
Flight Centre recorded a full year $849 million loss before tax. The group raised $900 million in April via a $700 million capital raising and a $200 million increase in our debt facilities, and in July completed the $62.15 million sale of its Melbourne head offices and secured a government-backed loan in the United Kingdom.
The group has a $1.9 billion cash balance at the end of July, including circa $1.1 billion in liquidity.
