Clearer skies ahead as Flight Centre targets near-term return to profitability

Clearer skies ahead as Flight Centre targets near-term return to profitability

Flight Centre managing director Graham Turner.

Flight Centre Travel Group (ASX: FLT) is emerging from turbulence as the Omicron wave of COVID-19 begins to subside, announcing today its revenue doubled during the December half with that trend continuing into the new year.

Though the company’s underlying loss after tax is essentially the same as it was in the prior first half, FLT today reported its total transaction value (TTV) rose by 112.9 per cent to $3.2 billion, and its revenue doubled to $315 million in the first half.

As such, FLT says it is targeting a near-term return to profitability after a “significant recent improvement in market conditions globally”, driven by the easing of international border closures and general COVID-19 restrictions, as well as Omicron cases decreasing in key markets.

While the significant increase to both revenue and TTV is promising for FLT, both figures are a far cry from where the company was pre-pandemic. In 1H20, TTV was $12.4 billion and revenue was $1.55 billion.

Nevertheless, the company is claiming this half as a win and is optimistic, predicting that monthly sales in February could top the COVID-period gross TTV record achieved in November 2021, with recovery being seen across all geographies and across both the leisure and corporate sectors.

Based on these projections, FLT anticipates both corporate and leisure businesses are on track to deliver more than 50 per cent TTV growth compared to January 2022.

Further, Flight Centre expects the EMEA (Europe, Middle East and Africa) and Americas businesses (which collectively generated 50 per cent of 1H TTV and more than tripled sales during the same period) to lead the recovery, with corporate TTV in these regions tracking 90 per cent and 55 per cent respectively above January levels.

“After two years of lockdowns and heavy restrictions, we are now seeing the strongest indicators of a return to normalcy. Borders are now generally open and some governments, particularly in Europe, are starting to treat the virus as endemic,” Flight Centre managing director Graham Turner said.

“Changes are happening at pace – we are seeing positive new developments relating to travel every day.

“Confidence in the recovery is building and momentum is taking off globally, as we are clearly seeing right now in both the corporate and leisure sectors and particularly in the three regions that materially drive our results – EMEA, the Americas and Australia.”

Shares in FLT are down 4.72 per cent to $19.18 per share at 11.22am AEDT.

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