Flight Centre Travel Group Ltd (ASX: FLT) shares are taking off today after providing an update for June 2020. The Flight Centre share price is up 3%.
Flight Centre’s June 2020 update
The company said it had a $1.9 billion cash balance at 30 June 2020 with around $1.15 billion of liquidity. It has received or secured access to around $200 million in additional funds during July.
Pleasingly, the company said that its short term net operating cash outflow target was beaten. In July it saw a $53 million net outflow, which was below its monthly target of $65 million and included $17 million in revenue. The outflow was $43 million with the net benefit of the jobkeeper subsidy included.
Flight Centre said its corporate business was profitable (on an underlying basis) during FY20 and it won a record amount of new accounts.
The company said there are signs of a corporate recovery in most countries but a slower leisure recovery is likely because most customers are still unable to travel.
Profit (loss) expectations
Flight Centre said that it’s expecting an underlying loss of between $475 million to $525 million. The statutory loss is expected to be between $825 million to $875 million after including write downs and ‘one-offs’.
It had made around $150 million of underlying profit before tax up to the end of February 2020. COVID-19 has clearly had a massive effect.
Summary
The company is doing its best to cut costs. But ultimately it’s going to be controlling the virus and the lifting of restrictions that helps Flight Centre return to profitability.
Who knows when that will be? It could be just a few months if a healthcare solution is found soon. Or it could be a lot longer if there is no answer. Who knows? For that reason, I think there are other ASX growth shares I’d rather buy like Bubs Australia Ltd (ASX: BUB).
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