Flight Centre books annual loss but recovery gains pace

Fuelled by a rapid corporate and leisure travel recovery late in the financial year, Flight Centre’s revenues topped $1bn, well up on the previous year.

Flight Centre managing director Graham Turner said supply constraints, particularly airline capacity was not currently slowing travel demand. Picture: Tara Croser

Fuelled by a rapid corporate and leisure travel recovery late in the financial year, Flight Centre’s revenues topped $1bn, well up on the $396m produced the previous financial year.

However, the travel agency produced a statutory $337.8m pre-tax loss for the 2022 financial year a significant improvement on the $601.7m loss it announced the previous year.

Flight Centre highlighted its corporate business was profitable for the entire financial year outpacing the business travel industry’s recovery and managing director Graham Turner believes the entire global group will be in profit by the 2023 financial year.

“We would be disappointed if we didn’t have a profit by the 2023 financial year,” Mr Turner told The Australian.

Higher airfare prices coupled with lack of capacity as well as increased sales in corporate travel particularly in the Australian market helped along revenue margins.

Mr Turner said supply constraints, particularly airline capacity, were being monitored but was not currently slowing travel demand.

“The global travel market is highly resilient...(there’s) large potential upside as normal travel patterns resume,” he said.

Flight Centre’s total transaction volumes stood at $10.3bn for the 2022 financial year up 162 per cent on the previous year.

Rapid sales growth globally after governments relaxed or removed international and domestic travel restrictions drove the rapid recovery.

“There is some ongoing supply constraints and macro-economic uncertainty, although these factors do not seem to be slowing the recovery at this stage,” Mr Turner said.

He said there is little air capacity into and out of Australia which will not ease until next year, but he says there will be more flight availability in October and November. “Prices will come off (but) if anyone is travelling at Christmas in premium classes they will have trouble getting a seat. Asia particularly Japan and China is a problem, rule it out. UK and Europe are very popular, and are not a bad option at Christmas.

“With UK and Europe if you can get seats they will be pretty good around Christmas.”

He said customers had both the means and the desire to make the most of their limited holiday time after being denied the opportunity for some two years.

Overseas leisure travel is helping drive recovery for Flight Centre.

“Corporates also continue to re-engage face-to-face to re-establish old business relationships or to create new ones,” he said.

Mr Turner added that although he believed further lockdowns were highly unlikely ‘there is little visibility around government’s future strategies or intentions’.

Mr Turner said government bodies chaired by general practitioners and public servants had had an “unhealthy” influence on government decision making during the covid lockdowns.

Apart from Asia, all of Flight Centre’s regions returned to profit in the fourth quarter including Australia and New Zealand, Europe, Middle East and Africa.

On the corporate travel front Flight Centre said it was winning very high market share in Australia and the Northern Hermisphere and ‘continues to win unmanaged business and accounts from competitors’.

“Wins are accelerating, as competitors struggle to meet clients’ needs in the current trading climate,” Flight Centre said.

Flight Centre’s tour companies including Topdeck are back on the road with larger scale returns scheduled for next year while its hotel management business is expanding with more than 30 properties throughout Asia.

Flight Centre has $1.3bn in global cash and said it would continue to expand its leisure and corporate workforces.

In a note analyst Jarden said it remained positive on Flight Centre which had retained a strong momentum. “This result (is) less about the actual numbers and more about momentum and expectations moving forward...”

It did not declare a dividend.

Flight Centre shares closed down 4.6 per cent at $16.55.