Flight Centre’s Managing Director ‘Skroo’ Turner is said to have personally taken a $90m hit yesterday after the travel agency group’s shares fell by up to 16 percent.
The dive in the market came after the company downgraded its profit expectations and warned full-year earnings for 2014/15 would fail to meet record profits of the prior 12 months.
In a market update, Flight Centre said based on current trading results, it expects to report an underlying profit before tax of between $355 million and $365 million. The mid-point ($360 million) is at the bottom of the company’s targeted range of $360 million to $390.
The result is also 4.4 percent lower than 2013/14’s record of $377 million.
Graham Turner’s private company hit by share drop. Image: 2GB
Flight Centre attributed the drop to a flat domestic leisure travel market as well as a loss of market share in flight and accommodation bookings.
Following the announcement, shares for the travel agency group fell by 16 percent to some $36.43.
The stock recovered slightly towards the end of the day to reach $37.51. This morning it opened up at $36.63.
According to Stuff.co.nz, Turner’s private company, Gainsdale, which holds a 15 percent stake in Flight Centre, lost an estimated $90 million as a result of the sell-off.
While Flight Centre’s international business is expected to ‘deliver solid profit growth’, the company says leisure ‘will not achieve its normal trajectory’.
“Corporate travel results have generally been reasonable, although the downturn in the resources sector has again affected performance in Western Australia and the Australian corporate travel market as a whole.”
Graham ‘Skroo’ Turner, Flight Centre Managing Director
In the overseas market, solid growth is expected to come out of the UK, US, Singapore and South Africa.
While in Australia, the total transaction value (TTV) will exceed last year’s by three percent.
Flight Centre says this growth was driven by corporate business, which is up about four percent in turnover terms.
Excluding Travel Money, overall leisure sales are expected to be relatively flat, while earnings before interest and tax (EBIT) will fall short of the record result achieved the prior 12 months.
Flight Centre said there were signs of recovery during the second half of the financial year and the overall market had returned to modest growth.
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