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Flight Centre Reports $317m Half-Year Loss, But Ready For Recovery

Flight Centre Travel Group (FLT) has reported a $317 million loss for its half-yearly review before tax compared to a $102.7 million profit in the previous period last year. However, the global giant says it is "seeing a number of positive indicators and is well placed for the recovery."

Flight Centre Travel Group (FLT) has reported a $317 million loss for its half-yearly review before tax compared to a $102.7 million profit in the previous period last year. However, the global giant says it is “seeing a number of positive indicators and is well placed for the recovery.”

In releasing its 2021 first-half accounts, FLT said today that while global trading conditions remained volatile, results had gradually improved thanks to strategic reductions in operating costs and revenue increases during the period.

Total turnover (TTV) for the December half (based on the half-yearly review) was $1.5 billion, down 82% on the same period last year.

As an antidote though to the decline since the crisis escalated in March 2020, the company said it has now:

  • Lowered its operational costs by 66% (representing a $1.9billion annualised saving) without jeopardising either its investment in key growth drivers or its ability to rebound quickly when conditions improve.
  • Continued to generate total transaction value (TTV) and revenue in a pre-vaccination, domestic-only travel world – December revenue was at its highest point since travel restrictions were introduced globally in March 2020.
  • Delivered month-on-month reductions in net operating cash outflow during the first-half; and
  • Maintained a $1.2 billion liquidity runway to help it withstand an extended downturn or capitalise on opportunities during the recovery phase, which could now be fast-tracked with the world’s largest-ever vaccination program underway.

FLT managing director Graham Turner said: “The conditions we have encountered since March last year have undoubtedly posed the greatest challenge that our industry and many others have faced.

“Rather than enter a holding pattern ahead of future domestic and international border re-openings, we are taking steps to ensure we are well placed for the eventual recovery.

skroo-turner-flightcentre
Graham ‘Skroo’ Turner, FCTG Managing Director

“We have become a leaner and more efficient business with a long liquidity runway, which has been crucial during this challenging and uncertain period. Our first-half liquidity was bolstered through FLT’s Melbourne office sale, debt restructure and the $400million convertible note issue.

“With an eye to the future, we have balanced the short-term need to reduce costs in a low revenue environment with the long-term need to invest in and enhance key assets.

“In this regard, we have maintained capital expenditure on key leisure and corporate technology projects at pre-COVID levels and have now started to deploy a number of important new products for our customers and our people, including:

  • Helio, a leisure platform that our consultants will use to search, quote, book and manage travel for their customers. Helio, which replaces six legacy systems, is now live in our United Kingdom, South Africa, New Zealand and Australian shops and will launch in the Americas in March 2021, with full deployment by June 30.
  • Melon, Corporate Traveller brand’s proprietary technology offering for SME customers. The Melon digital platform uses consumer-grade mobile technology, including robotics and artificial intelligence, to give customers the best experience and is currently being tested in the USA, ahead of its official launch in April; and
  • SOAR, FLT’s proprietary online booking engine, will soon have new features and content, including enhanced packaging capabilities and personalisation.

“In both the leisure and corporate sectors, we have continued to invest in new and legacy models and have proactively delivered innovative tech-backed-by-people solutions to customers of these legacy businesses, as evidenced by both Helio and Melon. “While we are in the early stages of recovery, we are starting to see some promising signs.”

In a further positive sign for the company and its large UK business, which generated about 10% of group TTV pre-COVID, British Prime Minister Boris Johnson this week outlined plans to remove most restrictions by June 21 as part of his “one-way road to freedom” strategy.

The company says they estimate domestic restrictions in the UK being lifted by April 12 and international travel permitted by mid-May, ahead of the peak Northern Hemisphere summer holiday season.

As expected, FLT’s recovery to date has been heavily weighted towards corporate and domestic travel – two sectors that FLT is significantly leveraged to.

The results come off the back of Helloworld Travel Limited who announced a first-half $21.5 million loss yesterday.

Read the full ASX release here.