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Flight Centre downgrades profit expectations

Flight Centre has downgraded its full year profit guidance from around $405 million to $390 million, citing the dip to a slow down in leisure travel spend.

Flight Centre has downgraded its full year profit guidance from around $405 million to $390 million, citing the dip to a slow down in leisure travel spend.

According to the group, the slowdown in leisure bookings continued on from the 2013/14 period into the five months to 30 November and even saw agents reducing commissions to lower overall ticket prices and stimulate demand.

The company now expects a growth on the prior year to be around four percent, down from the five- to- eight percent originally predicted for 2014/15. And underlying profit before tax for the first half of the year is expected to be between $136 million and $142 million, compared to the $146.3 million first half results last year.

“Unfortunately, we are yet to see tangible signs of full year recovery and the overall leisure travel market in Australia continues to be flat year-on-year.”

Graham Turner, Flight Centre managing director Flight Centre

Although unable to determine when leisure sales will recover, Mr Turner said he expects stronger demand as the year progresses and travellers take advantage of ‘cheap fares’.

Meanwhile, Mr Turner said the Australian corporate market remains stable and the company is experiencing ‘good growth’.

Internationally, Flight Centre is on track to achieve record results for the year to June 2015 as the weaker dollar drives more sales.

In the UK – the second largest profit generator – the year has started ‘solidly’ in both leisure and corporate travel.

Bookings are expected to grow as the company introduces new products including a unique range of tailor-made long haul holidays.

In the US, Flight Centre is on track to deliver its fifth consecutive full year profit, with earning before interest and tax reaching US$18 million. An increase of 50 percent on the prior year.

Have you experienced a dip in leisure bookings?