Flight Centre downgrades profit guidance blaming US tariff chaos

Travel retailer Flight Centre has downgraded its full-year profit guidance, blaming recent changes to US trade and entry policies.

US-led tariff turmoil has been blamed for a downgrade to Flight Centre’s full-year profit guidance, with the travel retailer noting recent developments had “exacerbated volatile trading conditions”.

In a trading update to the ASX Flight Centre revised its 2025 profit guidance from a range of $365m to $405m to between $300m and $335m.

The travel retailer also announced a $200m share buyback.

The update revealed that “recent US developments” had led to lower-than-expected total transactional value (TTV) growth in core brands which was affecting overall margins.

“Second-quarter earnings momentum reported at the half-year flowed through to early third-quarter results before US policy changes began to impact business and consumer confidence and corporate and leisure sales in March,” said the guidance.

“While Flight Centre will not achieve its initial full-year profit target, it continues to generate solid monthly profits, maintain a strong balance sheet and liquidity position, and have a positive medium to long-term outlook in a resilient sector.”

Various actions were being taken to address “short-term results volatility and underperforming businesses” such as StudentUniverse and the Canada leisure business.

These included a 5 per cent reduction in full-time employees, predominantly in non-customer facing areas; a recruitment freeze in other businesses; a 15 to 20 per cent capital expenditure reduction; and a focus on new opportunities from short-term travel pattern changes and temporary airline capacity shifts away from US destinations.

The share buyback was part of Flight Centre’s capital management policy, due to begin around May 12 and be completed within 12 months.

Flight Centre managing director Graham Turner at the company’s head office in South Brisbane. Picture: Steve Pohlner

Flight Centre managing director Graham Turner said the buyback underlined confidence in the strength of the business.

“While the 2025 financial year has been turbulent, our fundamentals are strong and we are well placed to deliver more rapid growth and enhanced shareholder returns next year and into the future as the trading cycle stabilises,” said Mr Turner.

“Group-wide we are maintaining cost discipline and implementing strategies to boost productivity and enhance the customer ­experience.”

The downgrade comes on the back of statistics showing a slowdown in domestic travel within the US, as well as a drop-off in international visitors, particularly from Canada.

A recent report by S & P Global Ratings said Air Canada was slashing capacity on some routes into the US by 10 per cent, and WestJet had noted a shift in bookings from the US to other leisure destinations, such as Mexico.

Tourists pack out New York’s Times Square in April 2024. Picture: Kena Betancur/AFP

Stricter border requirements in the US were also proving a deterrent, with reports of overseas arrivals having to hand over phones and laptops for examination and undergo lengthy interviews.

Global mobility and immigration expert Stacey Tsui of Vialto Partners said her advice to corporate clients was to “think carefully about the need to travel in the US”.

“Corporations need to look carefully at their people – and the risk factors. Is there anything in their background, their nationality, their travel history and even their social commentary that could cause a problem for them at the border? And if there is, they should reconsider their travel,” said Ms Tsui.

Flight Centre shares closed 1.04 per cent higher to $12.59 despite the downgrade, giving the Brisbane-based company a market value of $2.8bn. The stock has lost almost a quarter of its value since the start of the year.

Originally published as Flight Centre downgrades profit guidance blaming US tariff chaos