Flight Centre Travel Group (FCTG) has revealed it will close more than half of its global leisure shops, including more than 40 per cent of its Aussie retail stores.
The announcement was made in a trading update yesterday, which detailed a package of initiatives designed to strengthen the company’s balance sheet and liquidity position amid the COVID-19 crisis.
FCTG said it has moved to significantly reduce occupancy costs of its remaining retail network by renegotiating rental agreements with landlords, noting that discussions to date have been positive.
As reported previously by Travel Weekly, FCTG is also exploring the sale of its Melbourne head office site.
Furthermore, the company announced on Monday it would offer 97 million new shares as part of a $700 million capital raising, dubbed ‘Project Sky’.
FCTG has since moved out of a trading halt on the ASX after revealing it had already raised $562 million.
“We are extremely pleased and appreciative of the support we have received from existing shareholders and new investors,” FCTG managing director Graham “Skroo” Turner said.
“The suite of initiatives announced yesterday, including the equity raising, will enable Flight Centre to trade through this period of disruption to the global travel industry, while continuing to deliver exceptional service to our corporate and leisure customers.”
FCTG expects its cost-saving initiatives to save $1.9 billion on an annualised basis, resulting in anticipated monthly operating cash costs of approximately $65 million. The initiatives are set to be implemented by the end of July 2020.
The news comes after FCTG was named among several other companies, including Qantas, as a suitable acquisition target for Wesfarmers, which recently offloaded 5.2 per cent of its stake in Coles Group for $1.06 billion.
However, an FCTG spokesperson told Travel Weekly yesterday it had not been in contact with the WA-based giant about a potential deal.
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