Demand for travel remains resilient: Flight Centre
Australia’s largest travel agency is off to a solid start as it heads towards the end of the year after seeing a shift to cheaper destinations before Christmas.
Flight Centre’s first half net profit was $60.5 million, flat on a year ago, while underlying pre-tax profit rose 4 per cent to $125 million in the six months ending December; This was a better figure than expected.
Managing director Graham Turner said the group faced a challenging global trading environment but still managed to meet a record $12.5 billion in travel bookings.
“As we enter this busy trading period, the second half, we believe we’re well positioned for the full fiscal year,” he said in an earnings briefing Wednesday.
He said January brought record profits for the entertainment industry.
The result of the first half was notable for the shift to more affordable international destinations; cruise travel remained particularly popular.
The consumer-focused entertainment division also had a solid year; The transaction value increased by 10 percent during the year, reaching $6 billion.
The average customer age for this segment was 56 for in-store and 45 for online.
Total transaction value for the institutional market was running nearly 150 percent ahead of pre-COVID levels in 2019.
The division is on track to exceed $5 billion in revenue this year.
Flight Center revised its guidance for a higher full-year underlying pre-tax profit of $315 million to $350 million.
“Demand remains resilient,” Mr. Turner said, especially in the corporate and leisure travel segments.
Flight Center noted that its profits tended to deviate by 38 percent in the first and 62 percent in the second.
Flight Center is also accelerating the deployment of AI across the business, using capabilities that it claims “competitors cannot replicate.”
For example, it has launched an AI-powered consulting tool to facilitate research and proposal preparation in the entertainment industry.
This saves advisors up to 30 minutes per itinerary because it can instantly surface available hotels, activities, flights, and guides.
RBC Capital Markets analyst Wei-Weng Chen said Flight Centre’s first-half revenue and pre-tax profit beat expectations and was off to a “good start” for the second half.
Flight Center shares on the ASX were down 3.5 per cent at $12.82 on Wednesday afternoon.
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