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Flight Centre profit soars 565% for half-year, with leisure profit 30x higher 

The good times continue to roll at Flight Centre Travel Group (FLT), with the travel giant reporting total transaction value (TTV) of $11.3 billion for the first half of FY24, representing a 15 per cent rise on the year before and its second-best start to a year ever (behind FY20).

The good times continue to roll at Flight Centre Travel Group (FLT), with the travel giant reporting total transaction value (TTV) of $11.3 billion for the first half of FY24, representing a 15 per cent rise on the year before and its second-best start to a year ever (behind FY20).

Up 18 per cent year-on-year, leisure TTV hit $5.2 billion for the six months ending 31 December 2023, while corporate TTV rose 16.8 per cent to a record $5.9 billion, despite only 70 per cent of pre-pandemic volume returning to that sector.

On the back of this rise in TTV, Flight Centre reported a $106 million underlying profit before tax (PBT) for the half year to 31 December, which marks a $90 million increase – equal to 565 per cent – on the $16 million FLT achieved in the previous corresponding period (PCP). 

Underlying PBT for leisure totalled $60 million, which doubled the $30 million achieved in FY19, and signified a 30-fold increase on the $2 million first-half result achieved in FY23. Underlying corporate PBT grew 53 per cent to $93 million. 

Statutory PBT rose by a whopping 756 per cent to $120 million (PCP $18 million loss), while underlying EBITDA almost doubled to $189 million (PCP $95 million).

A Flight Centre store.

Flight Centre says the positive results highlight FLT’s and the sector’s resilience, given the current “uncertain macro-economic and geopolitical climate”. 

The positive news for consumers is that international airfares fell by 13 per cent (y-o-y) in Australia during the three months to 31 December – and Flight Centre expects this trend to continue. But this price deflation tempered FLT’s overall TTV growth rate. 

Investments in-depth

FLT reports that it continues to invest in key growth drivers such as its brand network, product offerings and platforms, with $49 million in H1 capital expenditure “weighted towards technology and systems, to enhance productivity and the customer experience”.

In leisure, Flight Centre remains focused on its omni-channel offering, giving customers:

  • The ability to book flights and cruises from “Anywhere to Anywhere” online
  • Access to airlines’ NDC (New Distribution Capability) offerings via airfare aggregator TP Connects 
  • A broader product range via the mobile app, including car hire and packages

In corporate, FLT has ramped up its investment in productive operations.

Marking long-term priorities for the group, other major investments included:

  • New wholesale and retail cruise businesses Cruise HQ and Cruiseabout
  • New brand for its independent arm, Envoyage
  • Expansion of the luxury leisure collection, including Travel Associates and the recently acquired Luxperience and Scott Dunn businesses, the latter of which opened in New York during H1
  • Travel Money’s new Click & Collect and Click & Deliver currency services

Travel winning

Flight Centre Skroo
FLT MD Graham ‘Skroo’ Turner

Flight Centre Travel Group Managing Director Graham Turner said travel was out-performing other discretionary spending, flagging the priority consumers place in travel. 

“We are seeing ongoing solid demand for leisure and corporate travel, leading to our second strongest start to a year in TTV terms and accelerated activity in January and February, ahead of our busiest trading months,” he remarked.

“Within our businesses, key strategies are gaining traction and driving margin improvements, which is leading to stronger profits and shareholder returns.

“Our corporate business, which has been heavily growth focussed since the start of the pandemic, has continued to grow rapidly – well above the industry’s recovery rate – while also targeting efficiency gains.” 

With leisure now performing comfortably above pre-COVID levels, Turners said the group can look forward to more “productivity-driven” improvement.

“We have capitalised on our current strength by investing $425M in capital management initiatives, including fully franked dividends for our shareholders, while also strengthening our systems and tech platforms and fast-tracking growth of emerging businesses that should become significant future profit generators,” he stated.

“Looking ahead, we are well placed for the full year as we approach our busiest trading months. We have good momentum and early 2H trading has been strong.”

A look at leisure 

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Exceeding pre-pandemic levels, Flight Centre’s leisure business generated 46 per cent of the group’s H1 TTV, with the Complementary, Luxury and Independent categories, generating 45 per cent of 1H leisure TTV at y-o-y growth rates of 50 per cent, 44 per cent and 29 per cent respectively. 

Elsewhere, Travel Money’s TTV more than doubled, with online travel agency Jetmax delivering a 75 per cent rise in TTV, while online TTV (mass market and complementary categories) hit $830 million, with contributions from flightcentre.com, the Jetmax businesses and StudentUniverse.

Meanwhile, the average booking within the global Flight Centre shop network now has 2.6 components, compared to 2.2 in December 2022, with the Captain’s Pack being attached to more than 60 per cent of in-store bookings globally.

Looking ahead

FLT predicts 2024 to be a watershed year for travel, citing IATA and other bodies that forecast the year to surpass 2019 as the busiest 12 months ever for travel. And it says it is well placed to capitalise on any further recovery in global travel demand.

“Early 2H results are in line with expectations, with TTV currently on track to surpass the record $23.7 billion result achieved during FY19 as leisure customers continue to prioritise travel and as the corporate business continues to win accounts to more than offset lower overall customer spend,” Flight Centre states.

“Given that the business continues to trade in line with expectations, there is no change to the financial outlook previously provided to the market.

“The non-cash change is unrelated to trading performance, but will see FLT increase its targeted FY24 range from an underlying PBT between $270M and $310M to an underlying PBT between $300M and $340M.”