Rebound in travel lifts Flight Centre guidance

BUOYED by a solid rebound in global travel, particularly in the northern hemisphere, Flight Centre has upgraded its guidance and now expects to post an underlying loss of about $185m for the year to June 30.

In a release to the stock exchange, the international travel agency said the company now expected to break even for the six months to June 30, a major turnaround after booking significant losses for the prior six months.

“Demand accelerated after concerns about the Omicron strain abated and as governments globally relaxed or removed the restrictions that had grounded most nonessential travel since the start of the pandemic,” Flight Centre said.

“With this acceleration, total transaction value for FY22 topped $10bn – more than 2½ times the $3.95bn FY21 result – and on a monthly basis was tracking near or above pre-covid levels in a number of businesses by yearend. TTV recovery has, to date, been fuelled by both an uplift in demand and higher than normal ticket prices linked to a lack of airline capacity, particularly on international routes.”

Flight Centre managing director Graham Turner said the turnaround had been achieved in both leisure and corporate travel.

“There will inevitably be ongoing challenges for the industry over the next six to 12 months as new strains of the virus emerge, airline capacity returns and as we rebuild staff numbers to required levels, 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,” Mr Turner said.

“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 previously forecast an underlying loss of between $195m and $225m for the 2022 financial year. It booked an underlying loss of $337.9m last year.

In a note, RBC Capital Markets said Flight Centre’s 12 per cent improvement at the midpoint had come despite ongoing challenges for the industry including new Covid strains, insufficient airline capacity and the difficulty of hiring staff.

Mr Turner cautioned not to get “too excited” about the result, calling it a “good start”.

“The northern hemisphere is getting back to normal pretty quickly,” he said. “They have reasonably good air capacity. Whereas Australia has a problem in that we took a much harder line with Covid.”

Flight Centre shares rose 3.6 per cent to $17.72.