(Reuters) - Australian online travel agency Webjet Ltd (WEB.AX) said on Wednesday it would raise A$275 million ($170 million) to deal with the impact of the coronavirus and government travel restrictions on its business.
Webjet joins several Australian companies rushing to secure funds as lockdowns force them to burn through cash while income dwindles amid supply chain disruptions and weak consumer sentiment.
The agency said it would raise the amount through a fully underwritten institutional placement worth A$101 million and a partially underwritten entitlement offer worth A$174 million.
The proceeds are expected to be sufficient to cover operating costs and capital spending until the end of 2020, even if severe travel restrictions continue, Webjet said in a statement.
In early March, the company scrapped the guidance for core earnings for full-year 2020 it had just issued a month prior, due to a surge in short-notice cancellations and a drop in overall booking activity.
“Webjet anticipates that any revenue contribution in the near-term will be nominal only, until the situation improves and travel activity resumes,” it said on Wednesday.
The company said it would make more than 440 roles redundant, defer its interim dividend payment and reduce executive pay, while its managing director would take a 60% cut to his salary for calendar year 2020 and forgo his bonus.
The cost saving measures will help save about A$13 million per month, with further measures planned if the situation does not improve over the next six months, Webjet added.
Reporting by Rashmi Ashok in Bengaluru; Editing by Tom Hogue and Miral Fahmy