The Flight Centre Travel Group released their figures for the six months to 31 December 2016 on Thursday with record sales of $5 billion for the first time ever and a pre tax profit of $109.2 million.
However, airlines’ adding capacity as well as new players entering the market led to international airfares hitting record lows in the last twelve months, which contributed to a 36 per cent drop in half-year profits.
Qantas, who also released their half-year profits on Thursday, reported a 25 per cent loss in its profits, despite still posting a solid result across the group. Read more.
Flight Centre Group CEO, Graham ‘Skroo’ Turner said the current market conditions and their impacts on the first half results had masked some of the company’s key achievements during the period.
Graham ‘Skroo’ Turner, CEO Flight Centre Travel Group Limited
“The airfare discounting, which was driven in Australia by rapid airline capacity growth during the 2016 calendar year, has delivered unprecedented airfare bargains to our customers, but has affected TTV and revenue comparisons, given that fares were higher during the FY16 first half,”
Turner went on to say that productivity was improving and “our record ticket sales again underline the strength, relevance and diversity of our offerings and of our omni-channel network”.
There were also a number of other upbeat results for Flight Centre Travel Group, with many of their newer ventures like Aunt Betty and byojet reporting big increases in TTV and Turner adding that online sales were growing for the company, both in leisure and corporate travel.
The Australian sector delivered record TTV, and Flight Centre’s ticket sales grew faster than the rate of outbound travel, suggesting that the company actually grew its market share.
Healthy signs that more and more people are taking advantage of the record low airfares and travelling farther and more often, which will only benefit the industry in the long term.
auntbetty.com.au
Flight Centre did however; lower its expectations for the full 2017 financial year and are now forecasting an underlying pre-tax profit of between $300 million and $330 million (previously $320 million-$355 million).
Virgin Australia last week reported a $21.5 million loss in the first half, while Air New Zealand revealed a 24 per cent drop in its half-year net profit, indicating “revenue pressure from new competitors”.
“As travellers are very much aware, cheaper oil has led to strong capacity growth on international routes, pushing fares down and impacting all major airlines,”
Qantas chief executive Alan Joyce said.
Whilst Flight Centre’s Skroo Turner doubted airfares would go up again anytime before July but said he would not be surprised to see “modest” hikes in the second half of 2017.
