The Flight Centre Travel Group Ltd (ASX: FLT) share price will not be returning from its trading halt as planned on Monday.
This morning the travel agent giant requested the suspension of its shares until Monday March 30.
Why is the Flight Centre share price suspended?
Flight Centre released an additional announcement explaining the rationale for its suspension.
It requested the suspension for the following reasons:
- To develop its comprehensive response to the unprecedented travel and trading restrictions that governments are implementing to slow the coronavirus’ spread. Especially after Prime Minister Scott Morrison advised against non-essential domestic travel in Australia in the near-term and some shops being forced to close temporarily in some locations
- Continue the positive discussions it has been having with key stakeholders on ways to manage the financial impacts flowing from these restrictions and forced closures.
- Liaise further with governments to discuss support packages for businesses and people who are adversely affected.
In addition to the above, the company revealed to that it would be cancelling the interim dividend of 40 cents per share that was declared last month with its half year results. This will save the company approximately $40.1 million.
Flight Centre’s managing director, Graham Turner, explained: “Cancelling the dividend was not a decision that was taken lightly, but we felt it was appropriate to preserve cash and protect long-term shareholder value, given the current uncertainty and the unprecedented actions that governments have been forced to adopt to slow the coronavirus’s spread.”
The company also revealed that its senior leaders will take a 50% pay cut in order to conserve cash.
Elsewhere, the Webjet Limited (ASX: WEB) share price has also been suspended from trade. It will remain suspended until it concludes terms on a proposed capital/equity raising. Unlike Flight Centre, though, Webjet’s suspension is indefinite.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Flight Centre Travel Group Limited and Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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