DOWNTURN HITS FLIGHT CENTRE PROFIT

DOWNTURN HITS FLIGHT CENTRE PROFIT

SAVVY holidaymakers turning to online competitors have slugged Flight Centre (ASX:FLT) with the travel retailer downgrading its profit guidance.

Underlying profit before tax is forecast to be between $355 million and $365 million in FY15, down from its earlier target of $360 million to $390 million.

Consultant discounting in the first half to stimulate demand and compete with bargain market pricing has contributed to the decline.

Flight Centre managing director Graham Turner says the growth in the retailer's international division won't be enough to offset the domestic decline.

"While our mainstream leisure growth has been subdued this year, the investments we are making in the marketing and customer intelligence areas will help us generate stronger returns on our marketing spend and increase our market-share in the future."

Turner says the company hasn't kept pace with the recovery, as demonstrated by modest growth during the traditional "uplift" months of May and June.

"This competition looks set to continue, with Airbus recently predicting in its Global Market Forecast that the passenger aircraft fleet serving the Australia South Pacific region will almost double by 2033.

Earnings in the US are set to increase by 50 per cent this year, while the UK is on track to reach GBP$1 billion in transactions.

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