It came as the Australian share market was hit by a Black Friday carnage with an opening fall of more than 7 per cent pushing the ASX200 below 5000, wiping out four years of gains while some of the blue-chip stocks were hit with falls of more than 10 per cent.
The three companies have started slashing costs. Flight Centre said it would close 100 underperforming outlets by June 30 as part of an accelerated program to deal with the downturn. Staff will be redeployed to other outlets, but it did little to arrest a slide in its shares which fell below $17 for the first time since 2012.
It was only a month ago that the companies revised their guidances but the impact on travel companies has increased as governments around the world started closing borders. Qantas has also slashed services and the impact on the global airline industry has been estimated to be $US100 billion ($A159 billion).
Virgin has also announced more service cutbacks, a drop in capacity and a temporary reduction in board fees and management bonuses and said it could no longer give an earnings guidance because of the impacts of the coronavirus.
But surprisingly its bookings to Queensland destinations like the Gold Coast, Sunshine Coast and Hamilton Island are ahead of the same time last year indicating that domestic tourism has some life.
Virgin has also confirmed one of its flight crew has tested positive for the coronavirus and it was trying to find anyone who may have been in contact with the crew member.
Virgin said it was seeing increasing weakness in international forward bookings and will reduce capacity by 8 per cent in the second half. It had already announced it was withdrawing its Hong Kong service.
Flight Centre managing director Graham Turner said the company would use its experience from dealing with SARS and the GFC by stimulating demand.
He said people were still booking travel and that its total transaction value had increased in February.
“As we saw with SARS and the GFC in Australia the rebound can be relatively fast and strong after a fairly significant downturn in international travel,” Turner said.
He said Flight Centre would ramp up in sales and marketing at a time when its competitors may be forced to pull back.
Virgin said its forecast group capacity reduction had grown from the 3 per cent it announced in February to 6 per cent for the second half and then increase to 7.7 per cent in the first half of 2021.
It will reduce services to Los Angeles, Japan and on its trans Tasman route and cut its Auckland services between Tonga and Rarotonga.
The board and chairman will take a 15 per cent cut in fees while management will lose bonuses.
Corporate Travel Management said the impact was now more severe than its previous assumptions because of the actions of governments to close their borders and the ban by companies on corporate travel.
It has started shorter work weeks, leave without pay and asking staff and management to take holidays. Its non-executive directors and its managing director will take a 20 per cent reduction in fees and fixed salary.Jump to next article