Buoyant Flight Centre sees big tailwinds

With international flight capacity expected to return to pre-Covid levels by the end of the financial year, reducing domestic and international airfares, and still untapped demand for travel, Flight Centre has produced its secondstrongest start to the year since its founding in 1982.

The group’s statutory profit before tax lifted to $120m, compared to an $18m loss in the prior corresponding period, while underlying earnings almost doubled to $189m. The result was underpinned by a 15 per cent increase in total transaction values to $11.3bn.

Global investment bank RBC Capital Markets said the result was slightly weaker than expected, but Flight Centre is no doubt buoyed by the expected return to pre-Covid levels of international flight capacity by the end of June, coupled with airfares dropping by an average of 13 per cent in Australia and about 7 per cent globally.

“After four years of disruption and then gradual recovery, 2024 is set to be a watershed for travel,” the company said.

Managing director Graham Turner said the decision to block Qatar’s request for more flights had kept airfares high, but Turkish Airlines’ entry had helped reduce prices.

“You can see the impact of greater capacity, whether its Turkish, Singapore Airlines, Delta, United, and that is why the fares in the last quarter have come down 10-15 per cent, and we believe they will come down 9 per cent in the next six months,” he said.

Mr Turner added that as Cathay and Singapore Airlines increased capacity, it would put pressure on the Middle Eastern carriers en route to Europe.