No wonder, coronavirus pandemic has weighed down heavily on the travel and aviation sector owing to strict travel restrictions across the world. With the accelerating spread of COVID-19, the passenger operations have crumpled at a phenomenal rate. Additionally, the recently levied ban on overseas travel by the Australian government is further deepening the sector’s turmoil.
To support the severely affected aviation sector overcome from COVID-19 travel bans, the federal government has recently declared a $715 million relief package. As a part of the package, the government has waived a range of fees and industry levies, including air service charges, regional and domestic aviation security charges and aviation fuel excise. Moreover, the government has decided to reimburse the $159 million gathered from them since 1st February 2020.
However, unsatisfied with the existing relief package, the Australian aviation unions have demanded direct support for aviation workers, urging for packages that cover all employees and businesses in the industry. The unions’ demand has come up as the Australian airlines as well as travel players have stood down thousands of workers across the coronavirus crisis.
Given this backdrop, let us discuss some ASX-listed travel and aviation stocks that have recently stood down a massive number of their staff members against plummeting travel activity and demand:
FLT’s Coronavirus Response Plan is Out
To overcome the continuing challenges posed by COVID-19, the Flight Centre Travel Group Limited (ASX:FLT) has revealed its three-pronged coronavirus response plan. The Company has developed plans to:
- Preserve cash, wherever possible
- Significantly and immediately reduce cash across the globe
- Access further liquidity in the short-term
The Company has decided to temporarily lower its 20,000-person international workforce to preserve future jobs and better reflect the current trading climate. Moreover, it has decided to retain up to 70 per cent of its international workforce.
In response to standing down its several workers, FLT’s Managing Director, Mr Graham Turner, commented:
The Company has also planned to take the following steps in the near-term:
- Extending and accelerating leisure shop closure plans across the globe.
- Engaging with potential employers to hire stood down Australian employees.
- Seeking additional support from the government.
- Developing comprehensive resources.
- Initiating 50 per cent pay reductions for board members and senior executives.
- Lowering occupancy costs by readjusting rental contracts with landlords.
- Pausing major expense items, including sales and marketing spend of $15million-per-month.
In addition to these measures, FLT is proactively contacting federal and state governments to discuss numerous support mechanisms that will assist the Company secure more jobs for the future.
FLT last traded on 19th March 2020, at $9.910.
Virgin Australia Extended Domestic Capacity Reductions
One of Australia’s largest airlines, Virgin Australia Holdings Limited (ASX:VAH) has recently extended its domestic capacity reductions to 90 per cent from 50 per cent, which means it will temporarily suspend services to nineteen Australian destinations operated by the Company currently.
However, it will continue to retain connectivity to seventeen Australian destinations to transport critical freight, essential services and logistics.
With state border closures intensifying across the nation, the Company will begin grounding and repositioning over 125 aircraft in its fleet by the end of this week. Moreover, it has decided to temporarily stand down about 8,000 of its 10,000 strong workforce till May end to preserve future jobs.
Following the Australian government’s new social distancing regulations, the airline has also temporarily shut down all its lounges.
VAH’s stock rose by ~17 per cent on 26th March 2020, closing the trading session higher at $0.083.
Qantas Secured $1.05 billion in Additional Liquidity
To strengthen its position amidst coronavirus crisis, Australia’s largest airline by fleet size, Qantas Airways Limited (ASX:QAN) has secured $1.05 billion in additional liquidity, completing a fresh round of debt funding.
The Company has obtained the debt against part of its fleet of unencumbered airplane, bought in cash during recent years. The funding has resulted in a rise in its cash balance to $2.9 billion, along with a further $1 billion undrawn facility staying available.
Qantas is amongst those aviation players that have faced harsh impacts of a substantial decline in travel demand owing to COVID-19 pandemic in the last few months.
Recently, the Company along with Jetstar, stood down its majority of 30k employees until May end to preserve as many jobs as possible in the long term. Moreover, the Company’s board and senior management executives rose their salary reductions to 100 per cent from 30 per cent until the end of the current financial year, for additional support.
HLO Announced Significant Cost Reduction Actions
ANZ travel distribution company, Helloworld Travel Limited (ASX:HLO) has recently announced significant cost reduction actions to mitigate the effect of rapidly evolving coronavirus landscape. Considering a substantial decline in demand for its services due to the rapid de-escalation of domestic and international travel, the Company has come up with the following actions:
- Implementing 275 redundancies in different countries at an estimated cost of $1.4 million to the business.
- Standing down around 65 per cent of its workforce throughout all countries.
- Offering reduced working hours to all its remaining personnel.
In addition, the Company mentioned that its Executive Director and CEO will take no salary for the next 3.5 months to 30th June 2020. The Company has also frozen marketing and membership fees for all its network members for a 6-month period from April to September.
HLO closed the trading session at $0.93, with a rise of 3.33 per cent.
Apparently, COVID-19 pandemic has resulted in a major blow to companies operating in the travel and aviation sector, forcing them to lay-off several employees for the continuity of their businesses. However, the federal government is doing its best to support the sector and is likely to come up with further stimulus in the coming days.
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
Want to get exclusive insights into the star stock of the year? Gold stocks stood solid and ensured a safety net for investors.
Click now to access our report on Gold Stocks to understand how the rise in gold prices propelled the ASX-listed gold stocks, and many emerged as the star performer of the year.
Inside this report you shall discover
How the price trends of gold have got it where it is With the rallying gold prices and the record buying from Central Banks, the gold spot rose from $1,655.14 (low in December 2018) to $2,322.26 (high in August 2019). A promising return of over 40 percent was seen in the year 2019. Get exclusive insights into how the trends set the foundation for the performance and how Gold stocks seem to be a safe bet when you look back.
Which stocks you should have been looking at: Find out which stocks delivered promising returns to investors. Gold stocks such as Gold Road Resources Limited (ASX: GOR), Kirkland Lake Limited (ASX: KLA) Newcrest Mining Limited (ASX: NCM) delivered better returns against the S&P Commodity Producers Gold Total Return Index.CLICK HERE FOR YOUR FREE REPORT!