FCTG $7 million Tempo hit

FLIGHT Centre Travel Group (FCTG) is expecting to incur in the order of $7 million in additional costs following the collapse of Tempo Holidays and Bentours (TD 20 Sep), due to a decision to ensure its customers were reaccommodated and not adversely affected.

The figures were released during an investor briefing by Flight Centre MD Graham Turner this morning, during which he also noted that the high profile collapse of Thomas Cook in the UK had not impacted FCTG.

Turner also reported “strong growth in online leisure sales in Australia” over the three months to 30 Sep, with MD Graham Turner saying website bookings had doubled over the period despite the relatively challenging trading climate.

BYOjet, Aunt Betty and flightcentre.com.au had together generated over $250m in Total Transaction Value (TTV) during the quarter, with growth “predominantly coming from domestic travellers who are new to the Flight Centre brand, rather than from existing customers who are moving between sales channels, pointing to increased market share over the period,” Turner said.

The figures confirm the ongoing trend of FY19, when Flight Centre generated $1.3b in TTV globally from its leisure branded websites and dedicated online brands.

During the presentation Turner also outlined changing trading patterns, including emerging opportunities in the home-based agent and ready-made holiday package market.

However, despite solid increases in TTV, underlying profit for the first half of the financial year would be below the prior corresponding period.

A range of factors included unrest and uncertainty which had slowed profit growth in the UK and the USA, as well as increased costs including additional consultancy fees, plus the new wage model introduced a year ago which had seen an additional $4.2 million paid to Flight Centre’s leisure sales staff during the first quarter of 2019/20.