Flight Centre has blamed the “heightened uncertainty” around coronavirus for the decision to permanently close 100 stores, roughly 11 per cent of its network.
The business also scrapped its earnings guidance, which sent shares dropping 18 per cent.
Flight Centre chief executive Graham Turner said, “Within this uncertain environment, our priorities are to reduce costs, while also ensuring that we and our people are ready to capitalise when the steep discounting that is underway across most travel categories starts to gain traction and as the trading cycle rebounds.”
The closures will take place before 30 June, and the group will look to transfer some sales staff to other stores to avoid redundancies.
Executives will also give up 30 per cent of their fees for the rest of the financial year, while some remaining stores will reduce their training hours.
Recruitment has been suspended, “non-essential projects” deferred and employees will be asked to take leave to alleviate the pressure.
In a statement to the ASX, Flight Centre said, “The virus’ spread and increased travel restrictions mean demand is softening significantly and the time frame for recovery is unclear.
“We are now seeing significant softening and expect this to continue into April at least.”
However, the business predicted it would bounce back strongly from the pandemic.
“As we saw with both SARS and the GFC in Australia, the rebound can be relatively fast and strong after a fairly significant downturn in international travel,” it said.
Last month, Flight Centre reported a net profit after tax of $22 million, down from $62 million in the same half last year. Underlying profit was 20 per cent lower.
The group declared a half-year dividend of 40 cents per share.