Flight Centre’s underlying earnings back to breakeven as the travel bug bites in a big way

Flight Centre’s underlying earnings back to breakeven as the travel bug bites in a big way

Flight Centre Travel Group (ASX: FLT) is on track for a breakeven result in the second half of FY22 following a sharp rebound in global demand for holiday and business travel earlier this year in what the company says is an increasingly complex environment.

The Brisbane-based travel group is expecting an underlying EBITDA loss of between $180 million and $190 million for the FY22 full year, down 11.9 per cent from its previous forecast. But the company is expecting an EBITDA breakeven for June half after rebounding from significant losses throughout most of the year with the tide turning at last in February.

The upgraded full-year EBITDA loss compares with a $337.9 million loss in FY21 and reflects pockets of profitability returning to the group amid diminishing concerns by travellers over the Omicron strain and a relaxation of travel restrictions in many jurisdictions across the world.

Flight Centre has reported more than $10 billion in total transaction value (TTV) for the year, a massive gain on the $3.95 million recorded in FY21.

The company says TTV towards the end of FY22 was tracking close to pre-COVID levels across a number of its businesses, thanks to higher demand and higher ticket prices, which was boosted by a shortfall in airline capacity, especially on international routes.

“After an incredibly challenging period, we were pleased to achieve our goal of returning to monthly underlying EBITDA profitability in both the corporate and leisure sectors late in the year,” says Flight Centre founder and managing director Graham Turner.

“The scale of our recovery exceeded our initial expectations and meant that we should now exceed our preliminary FY22 result target, with early trading results pointing to a breakeven second-half result and a healthy fourth-quarter profit (on an underlying EBITDA basis).”

However, Turner warns of ongoing challenges for the industry over the next six to 12 months as new strains of COVID-19 emerge, airline capacity builds and the group restores staff numbers.

“But we feel that we are well placed to overcome these concerns given our corporate business’s continued rise and our leisure business’s ongoing strength,” he says.

“In the corporate sector, we are gaining market-share globally through high customer retention rates and a multibillion-dollar pipeline of new accounts won across our Corporate Traveller and FCM brands during the pandemic.”

Flight Centre has revealed its Corporate Traveller business scored several wins during the period ranging from start-ups and small to medium-sized businesses, while the FCM business has won over a number of enterprise-level global accounts such as Shell from its competitors.

“In the leisure sector, our success is built on having strong brands and sales channels that are resonating with customers in what is now a more complex travel environment,” says Turner.

“We are seeing positive returns on our investment in new growth models, with offerings like our independent agent channel growing rapidly, and signs of a solid recovery in complementary brands like Travel Money, our foreign exchange business which is again open and profitable.”

Flight Centre plans to release its audited FY22 accounts on 25 August 2022.

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