Flight Centre profit drops amid Middle East tensions, US travel slump
The travel agency giant has warned investors its profit has dropped amid geopolitical volatility and corporates cutting costs, but its boss believes travel bookings will bounce back.
Flight Centre has warned volatility in the US and Middle East have contributed to a lower profit than expected, but its boss believes travel bookings will bounce back over the rest of the year.
The travel agency group has flagged it expects an underlying profit before tax in the range of $285 million to $295 million for the 2025 financial year, below its previous guidance range for investors and up to 11 per cent lower than the year before.
Unaudited results for the 2025 financial year showed the company expected a record total transaction value of $24.5 billion, compared to $23.7 billion the year before.
It said its anticipated profit drop was due to short-term challenges, including tensions in the Middle East, a “global downturn in bookings to the US”, as well as underperformance in Asia.
Customers were either delaying travel plans or choosing to travel closer to Australia, with destinations including China, Japan, Fiji and NZ, it said.
Managing director Graham “Skroo” Turner said the past 12 months had been “volatile” for the travel industry, with geopolitical unrest slowing the company’s post-COVID rebound.
Travel into the US had slowed amid “erratic” announcements from president Donald Trump, but the trend was expected to reverse, Mr Turner said.
“It’s very hard to predict what will happen in North America under Donald Trump,” he said.
“I think the thing we believe is that generally the markets, the American people and the other people who go there on business or tourism will get used to his eccentricities and it won’t make a lot of difference.
“But I don’t think we’re there yet.
“I think people are still cautious about travelling to America at the moment from most of our major markets.”
Bookings had also been impacted amid the Israel-Gaza conflict, with Australians concerned about flying over the Middle East to reach Europe, he said.
US travellers meanwhile had cooled on “big tourist markets” like Egypt, Jordan and Israel, Mr Turner said.
Corporate travel was also expected to produce a lower profit from the year before, although the segment “performed solidly” outside of Asia.
“Generally businesses are down-trading, they’re trying to save money, particularly on travel,” Mr Turner said.
“Travel’s one of the first things they save money on. We’ve seen that really consistently in most of our major markets.
“That will probably come back as generally... you can curb your travel for some periods of time but at some stage you need to get back in front of your customers and your suppliers.
“We believe that will come back pretty well over the next six months.”
Flight Centre has announced a new loyalty program, costing approximately $15 million in the last year, which it said would deliver a new revenue stream and a “superior” customer experience.
The program, planned to launch around October to November, will span the Flight Centre, Cruiseabout and Travel Associates brands in Australia.
Flight Centre said the loyalty program could expand to its other businesses in the future.
The company has also signed a new agreement with AI developer Anthropic, which it said would help with cost savings and the development of new chatbots, including a co-consultant product for travel agents.
Meanwhile it had other measures underway to respond to short-term volatility, including cost reductions across the group.
During the 2025 financial year, it closed travel bookings website StudentUniverse and wholesaler The Travel Junction.
“Most of the tough decisions have been made and were taken up in the 2025 financial year,” Mr Turner said.
“There’s probably not too much more that we need to do in the future.”
The company will release its audited results in late August.
Flight Centre’s share price was $11.75 at 2:45pm, down from $12.91 yesterday afternoon.
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