Flight Centre faces A$400M liquidity shortfall: Morgan Stanley
04/02/2020|1:52:06 PM|Financial Review

Flight Centre is pulling all the cost-cutting levers available to it as it battles a precipitous drop in travel activity due to the coronavirus pandemic.

The now AU$1 billion company announced its three-pronged plan to tackle the travel industry crisis to the market on Thursday, focused on costs, cash and liquidity.

Part of that plan would see 6000 staff stood down or sacked and 500 local and international stores close their doors in the next few months.

According to Morgan Stanley's analysis, Flight Centre has AU$483 million of liquidity available to it to weather the COVID-19 storm.

Assuming total transaction value declined by 90 percent – it has fallen to between 70 and 80 percent below normal levels in March alone – the company would have enough liquidity to last four months.

However, the boffins at Morgan Stanley reckon having between 6 and 8 months liquidity is a prudent minimum for a travel industry company.

"In order [for Flight Centre] to achieve that prudent minimum 6-8 months of liquidity, we believe that AU$200 million to AU$400 million of additional liquidity is required," the analysts said.

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