Home Travel Industry News

Comeback Kings and Queens: FCTG march towards a return to profit

Flight Centre Travel Group (FLT) has today updated its 2022 fiscal year (FY22) market guidance following what it says was "a solid rebound in travel demand globally late in the year."

Flight Centre Travel Group (FLT) has today updated its 2022 fiscal year (FY22) market guidance following what it says was “a solid rebound in travel demand globally late in the year.”

Based on preliminary trading results for the last financial year, FLT says it now expects to record an underlying EBITDA* loss of around $185million for the full 12 months to June 30, 2022.

The global company says this represents an 11.9% improvement on the company’s initial market forecast of an underlying loss between $195million and $225million for the year.

Better still, based on preliminary FY22 trading results, the 40-year-old company says it now expects to break even (after tax and deductions) for the six months to June 30, 2022, which in itself will represent a major turnaround in light of significant losses through to February 2022.

FCTG says travel demand accelerated after concerns about the Omicron strain abated and governments globally relaxed or removed the restrictions that had grounded most non-essential travel since the start of the pandemic.

Thanks to that kick start of demand, total transaction value (TTV) for FY22 topped $10 billion – more than two-and-a-half times the $3.95 billion FY21 result – and every month was tracking near or above pre-COVID levels in several businesses by year-end at June 30.

What’s driven the turnaround?

Heathrow Airport
Heathrow Airport

The company says TTV recovery has, to date, been fuelled by both an uplift in demand and higher than normal ticket prices linked to a lack of airline capacity, particularly on international routes.

“After an incredibly challenging period, we were pleased to achieve our goal of returning to monthly underlying *EBITDA profitability in both the corporate and leisure sectors late in the year,” FLT managing director Graham Turner said.

“The scale of our recovery exceeded our initial expectations and meant that we should now exceed our initial FY22 result target, with early trading results pointing to a breakeven second half result and a healthy fourth-quarter profit (underlying *EBITDA).

“There will inevitably be ongoing challenges for the industry over the next six to twelve months as new strains of the virus emerge, airline capacity returns, and as we rebuild staff numbers to required levels, but we feel that we are well placed to overcome these concerns given our corporate business’s continued rise and our leisure business’s ongoing strength.

Skroo Turner
Skroo Turner speaks at FCTG’s 40th celebrations in Sydney

“In the corporate sector, we are gaining market share globally through high customer retention rates and a multi-billion-dollar pipeline of new accounts won across our Corporate Traveller and FCM brands during the pandemic.

“Wins range from start-ups and small to medium-sized businesses in Corporate Traveller to enterprise-level global accounts like Shell and other high-profile companies are moving to FCM from competitors.

“In the leisure sector, our success is built on having strong brands and sales channels that are resonating with customers in what is now a more complex travel environment.

“We are seeing positive returns on our investment in new growth models, with offerings like our independent agent channel growing rapidly and signs of a solid recovery in complementary brands like Travel Money, our foreign exchange business which is again open and profitable.

“In Flight Centre brand, our leisure customer offering will soon be bolstered by the addition of omnichannel capabilities, which will allow customers to move seamlessly between sales channels for the first time.

“The omnichannel capability will allow us to reach more customers and present exciting new deals, flights and holidays that are bookable instantly,” said Skroo Turner.

FLT will release its audited FY22 accounts on Thursday, August 25.

*EBITDA = earnings before interest, tax, depreciation and amortisation.