Flight Centre says it has paid nearly $500 million in refunds in Australia – and there's more to come

Photo: Scott Barbour/ Getty Images.
  • Flight Centre has revealed how much money it has refunded to Australians whose flights were impacted by coronavirus-related travel restrictions.
  • The company said it has given nearly $500 million in refunds to Australians alone.
  • It also expects underlying losses of between $475 million and $525 million during the 2020 financial year.
  • Visit Business Insider Australia’s homepage for more stories.

Flight Centre has revealed how much it has doled out in flight refunds so far, as the coronavirus pandemic continues to rock the travel industry.

The travel company said that so far it has processed full or partial refunds of almost $500 million in Australia alone. “The company is working to return money to customers as quickly as possible after airlines and other suppliers return that money to [Flight Centre],” the company said in a statement to the ASX.

It comes as the coronavirus pandemic caused the government to enforce travel restrictions, which led to a number of cancelled flights. Earlier this year, Flight Centre received criticism after initially charging a $300 per person fee to travellers who wanted a refund on a cancelled flight.

The company later capped its cancellation fee to $600 for any international booking and $100 for domestic flights.

In its latest statement to the ASX, Flight Centre said it expects underlying losses (before tax) of between $475 million and $525 million during the 2020 financial year. It also highlighted that 70% of its workers were either put on stand down, furloughed, or made redundant.

The company worked to cut down its costs by selling its Melbourne office, securing a government-backed loan in the UK and getting the JobKeeper subsidy.

With the government imposing travel restrictions and border closures, airlines have been forced to cancel services or scale back operations. And this, according to Flight Centre, has caused “an unprecedented volume of refunds and minimal forward bookings in the near-term.”

But despite the impact of these restrictions, the company was able to generate $17 million in revenue in July – a stronger than expected level of sales. “While this represented about 7% of the prior year result, the company had conservatively anticipated a zero-revenue scenario in its initial liquidity modelling,” Flight Centre said.

Most of the revenue the company has gained during the lockdowns has come from its corporate travel businesses, as essential services are allowed to continue. Leisure travel, on the other hand, has been more “subdued” due to tougher restrictions and low consumer confidence.

Flight Centre Managing Director Graham Turner said in a statement the government’s responses to the coronavirus pandemic has had a “devastating” impact on the airline, tourism, travel and hospitality industries.

“This has severely impacted us and our people and some very tough decisions have been made over the past four or five months,” he said.

But the company is starting to see glimpses of recovery, with its revenue starting to increase particularly in Europe and as it has secured new corporate accounts.

“This highlights both our corporate business’s resilience and its strong future growth prospects in this large, global travel sector which was estimated to be worth $US1.5 trillion per year pre-COVID-19,” Turner said.

He added that there are still challenges to overcome due to the pandemic.

“There are, of course, further challenges to overcome, plus ongoing uncertainty around government COVID-19 objectives and the strategies they will adopt in the near-term to counter the virus’s effects,” he said.

“It is critical that businesses across all sectors know these objectives and data lines for COVID-19 control and the lifting of restrictions – whether the end goal is community immunity, suppression, eradication or learning to live with this virus.”

Had an issue with your Flight Centre refund? Contact Sharon Masige: [email protected]


READ MORE:

  • Flight Centre has introduced caps on cancellation fees, following criticism from customers who had to axe bookings because of the coronavirus
  • Flight Centre will close 100 stores, citing increased uncertainty for the travel industry amid the coronavirus pandemic
  • Flight Centre announced it is standing down 3,800 Australian employees, as coronavirus restrictions put the travel industry on hold
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