Travel Agents

Flight Centre earnings take a hit as coronavirus impacts felt in Asia

Flight Centre has updated the market on its first-half earnings and outlook for FY20.

It comes as the travel giant takes a closer look at the impacts of coronavirus on Greater China and Singapore corporate travel businesses and broader leisure travel patterns.

In a statement on the ASX, Flight Centre said although it recorded a record TTV and underlying PBT for the six months to December 31 2020, the virus’s emergence has inevitably made it more difficult to deliver a strong second-half result.

Graham Turner, Flight Centre’s managing director, said that while it was too early to predict the virus’s overall impact, it had already adversely affected the company’s small corporate travel operations in China, Singapore and Malaysia, which together generate 2.5 per cent of group TTV.

Turner also indicated that a reduced number of outbound Chinese travellers, companies amending travel policies to prevent travel to China and other affected countries and altered leisure travel plans as a result of the virus could also impact the company’s earnings.

“It’s impossible to predict the virus’s impact on our business or on leisure and corporate travel in general at this early stage, but it will impact travel patterns to some degree in the near-term,” Turner said.

“To date, the impact has largely been felt in our Greater China corporate travel businesses, given that business activity and the country’s inbound and outbound travel sectors have temporarily shut down as part of the focus on containing the virus.

“Within this challenging environment, we are taking steps to ensure we can meet our customers’ needs while also minimising the impact on business on mainland China and in Hong Kong by encouraging our people to take leave over the next few weeks, while the outlook remains uncertain.

“By preserving our workforce in China during this period and carefully managing our cost base, we will be well placed to capitalise on any rebound in the travel sector when the situation improves.”

Flight Centre will release its first-half results on 27 February.

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