Flight Centre Travel Group announced on Monday it will close 428 Australian stores by the end of July, or roughly 40 per cent of its network.
However, the business has secured $900 million in fresh equity and debt to help it survive the coronavirus crisis.
In a statement released to the ASX on Monday morning, Flight Centre also revealed it is exploring the sale of its Melbourne head office as well as shutting 371 of its 593 Universal Traveller stores worldwide.
Managing director Graham Turner said, “It is – without question – the most challenging period we have encountered in over 30 years in business and it is inevitable that some businesses across our industry will fail.”
The news comes after the group revealed last month that 3,800 Australian sales and support employees would either be stood down or made redundant. It’s not known whether today’s announcement would add to that tally.
Flight Centre Travel Group has in total raised $900 million in equity – $700 million from capital raising and a further $200 million from existing lenders. Macquarie and UBS are lead managers and are underwriting the offer.
The combination of raising money and cutting costs would result in $2.3 billion of liquidity and a monthly cost base of around $65 million, less one-off implementation costs of $210 million.
Turner added, “With this funding in place and additional liquidity, we are in a much stronger position and are well placed to weather a prolonged downturn, which currently seems the likely scenario, and to then take advantage of the significant opportunities that will arise once conditions normalise.”
In the statement, Flight Centre estimated its transaction volumes fell to 20 to 30 per cent of its normal level in March.
Last month, the group pledged to return its stood-down workers when the COVID-19 situation abates.