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FCTG half-year results: $184m loss, aims for near-return profit in second half

Despite incurring a $184 million loss in the first half of the financial year to 31 December 2021, Flight Centre Travel Group (FLT) says it is targeting a near-term return to profitability for the second half after a significant recent improvement in market conditions globally.

Despite incurring a $184 million loss in the first half of the financial year to 31 December 2021, Flight Centre Travel Group (FLT) says it is targeting a near-term return to profitability for the second half after a significant recent improvement in market conditions globally.

With green shoots abound, the company says it is becoming “increasingly confident” that the rapid recovery it is seeing in both travel sectors since late January marks the start of a “material and sustainable rebound”.

This confidence the company says is based on:

  • Omicron concerns generally decreasing in key markets
  • Travel restrictions easing or being removed as countries learn to live with the virus and the world reopens – which is now happening at pace; and
  • Significant pent-up demand from travellers looking to make up for two years of lost time

FLT says it will, however, continue to monitor market conditions and developments, given the uncertainty around future variants and government responses to them and current tension in Ukraine.

Results in brief

FlightCentre

In total, underlying losses for the first half of the financial year were $184 million before tax and adjustments, with the company also benefitting from $65m of government subsidies in the period.

FLT recorded strong sales growth during the six months to December 31 2021, with revenue increasing 113 per cent to $3.3 billion compared to the previous calendar period.

The global leisure business recorded a $155 million underlying loss during the first half, compared to an underlying $120m loss during the previous calendar year.

As was the case company-wide, the removal of government subsidies adversely impacted results during the period and also masked a significant operational performance.

Highlights

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In Australia, Flight Centre brand delivered a $10 million revenue day on Tuesday 22 February 2022, the first time that this milestone has been achieved during the pandemic and a significant recovery towards the $15 million days that the company generally targeted pre-COVID.

Last week’s news of the impending West Australian border reopening led to a circa 200 per cent increase in searches for flights to and from WA on each of the first three days after the announcement.

Preliminary projections for February indicate that monthly sales could top the COVID-period gross revenue record achieved in November 2021, with significant recovery being seen across all geographies and across both the leisure and corporate sectors after a short-term omicron downturn in December and January.

Gross revenue for the group has increased quarter-on-quarter throughout the pandemic and has again spiked this month as governments globally have relaxed or removed restrictions that have grounded international and, in some cases, domestic travel for the best part of two years.

Staffing levels also increased during the first half – ahead of the recovery and in anticipation of strong demand after the world reopened – which contributed to increased employee benefits expenses during the period.

Forward Outlook

Skroo-Turner
Skroo Turner

Further recovery globally is expected in the months ahead, assuming omicron cases continue to decrease and restrictions continue to ease, as FLT closes in on its return-to-profit targets of 55 per cent of pre-covid turnover in corporate and 45 per cent of pre-covid turnover in leisure.

Commenting on the results, Flight Centre Travel Group CEO Skroo Turner said. “After two years of lockdowns and heavy restrictions, we are now seeing the strongest indicators of a return to normalcy. Borders are now generally open and some governments, particularly in Europe, are starting to treat the virus as endemic.

“Changes are happening at pace – we are seeing positive new developments relating to travel every day.

“Confidence in the recovery is building and momentum is taking off globally, as we are clearly seeing right now in both the corporate and leisure sectors and particularly in the three regions that materially drive our results – Europe, The Middle East and Africa (EMEA), the Americas and Australia,” he said.

“Travel will inevitably be more complex in the post-COVID recovery, given that government and airline policies vary, and this will play to the strengths of our expert travel advisors in both the leisure and corporate sectors.”

For the full results, head to: www.fctgl.com/asx-announcements