Apollo and Corporate Travel Management suspend guidance
13 March 2020,
Apollo Tourism & Leisure (ASX: ATL) and Corporate Travel Management (ASX: CTD) have joined Webjet (ASX: WEB) and Helloworld (ASX: HLO) in suspending profit guidance for FY20, as the coronavirus continues to take its toll on the travel sector.
Motorhome company Apollo was previously expecting a similar profit result to its FY19 figure of $14.7 million, but the US Government's ban on European flights for 30 days has thrown a spanner in the works of North American RV travel; a major source of its revenue.
The group notes there is a risk the ban could be extended and there could be further border closures.
With Europeans making up a significant portion of Apollo's USA guests, Apollo expects cancellations to materially increase for USA travel over the next 30 days, although the USA high season is not until June to September.
While Apollo has, as expected, experienced softness in booking intake and a small increase in cancellations over recent weeks, it now anticipates cancellations to be more significant and booking intake may also be impacted.
Apollo is taking steps across the global business to mitigate the impact of Coronavirus (COVID-19) and is working with guests who need to cancel or postpone their journeys.
"In the wake of the Coronavirus (COVID-19) outbreak we are carefully reviewing operating and capex spend as well as fleet lifecycles across the globe," says Apollo managing director and CEO Luke Trouchet.
Meanwhile, Corporate Travel Management (ASX: CTD) has withdrawn its guidance as well.
In February the company said it was tracking at the lower end of its previously issued full-year guidance of between $165-175 million, and copped flak from short seller VGI Partners which claimed it blamed poor performance on the coronavirus.
Corporate Travel Management says the impact being felt now is worse than previous assumptions due to further actions from governments to close numerous borders and suspend travel to and from countries and regions.
At the same time, some companies are also deciding to ban or limit travel, leading to "flow-on erosion in client activity across all regions".
"CTM has actioned several plans to manage costs against the reduced corporate travel activity, including staff leave, shorter working weeks on proportionate pay and leave without pay, which apply across the executive team and all of our staff," the company said.
"Additional measures include a freeze on all non-essential recruitment, reduction of all discretionary expenditure and delaying non-client facing project work.
Non-executive directors and the Managing Director will take a 20% reduction in their fees and fixed remuneration respectively for the remainder of this financial year."
ATL and CTD shares were down 18.42 per cent and 4.19 per cent respectively in morning trading.
Updated at 10:38am AEDT on 13 March 2020.