Flight Centre has just dropped its underlying profit guidance for the year by around 10%, saying the decision was based on “subdued trading conditions” in the Australian leisure market.
An update was released on the ASX this morning, explaining that “Australian leisure results have not yet recovered in line with expectations”
“Subdued trading conditions have continued to impact total transactional value in the lead up to the key May-June trading period,” Flight Centre’s CEO Graham Turner explained.
The “challenging trading climate in Australia” has been put down to “a period of significant change and disruption in the past two years”.
These changes included the deployment of a new GDS, the introduction of a new wage model for front-end sales staff, consolidating brand structures and an ongoing review of its shop network.
Flight Centre now expects its underlying profit before tax for the 12 months to June 30 to drop between $335 million and $360 million, below the $390 million- $420 million guidance they released last October.
One way that Flight Centre will innovate in the Australian market moving forward is by launching StudentUniverse next month.
StudentUniverse is a specialist online travel agency targeting the youth sector (it already operates in the US and UK).
Flight Centre was happy to report that sales are tracking at record levels elsewhere around the world and the company’s corporate travel results were strong especially in the United States, United Kingdom and Asia.
“Our FY19 result will highlight the challenges we are addressing in Australia but will also underline two of our great strengths – our emergence as a world leader in corporate travel and our changing earnings profile”.
CEO Graham Turner.
He went on to say that for the first time, businesses outside of Australia are expected to generate more than half of group profits and earnings globally will be weighted more heavily towards corporate travel.
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