The Flight Centre Travel Group Ltd (ASX: FLT) share price has returned to trade this morning and rocketed higher.
At the time of writing the travel agent giant's shares are up 15% to $11.37.
Why was the Flight Centre share price in a trading halt?
Flight Centre requested a trading halt on March 19 whilst it looked into the impact the coronavirus was having on its business.
After a thorough review, the company concluded that it needed to cut its costs materially and raise funds in order to get through this crisis.
In respect to its costs, Flight Centre has announced a large number of cost control initiatives and cash preservation initiatives. This includes the closure of more than 50% of its global leisure shops.
All in all, this is expected to reduce its annualised operating expenses by approximately $1.9 billion by July 2020. Which will mean Flight Centre has monthly operating costs of approximately $65 million, which I estimate is a reduction from ~$223 million previously.
That certainly is a big saving and leaves Flight Centre well-positioned to ride out the storm and come out the other end in a strong position. Especially following the completion of its equity raising.
Equity raising completes.
This morning Flight Centre announced the completion of its placement and institutional entitlement offer which raised a total of $562 million at $7.20 per new share.
Flight Centre's Managing Director and Chief Executive Officer, Graham Turner, commented: "We are extremely pleased and appreciative of the support we have received from both our existing shareholders and new investors. The suite of initiatives announced yesterday, including the equity raising, will enable Flight Centre to trade through this period of disruption to the global travel industry, while continuing to deliver exceptional service to our corporate and leisure customers."
Once the retail component is complete, Flight Centre is expected to have approximately $2.3 billion of liquidity. Given the reduction in its monthly operating costs, the company has sufficient liquidity to last it through even the most bleakest outlooks.
This, and positive COVID-19 developments, appear to have gone down well with investors today, leading to its shares rocketing higher. Elsewhere in the industry, the Webjet Limited (ASX: WEB) share price is up 9% in early trade.