Flight Centre in massive $485m turnaround

Flight Centre in massive $485m turnaround

Global travel agency group Flight Centre has pulled off a remarkable turnaround, lifting its gross profit by $485 million in the year to June 30.

The profit of $302 million comes off the back of a $183 million loss last year.

Flight Centre, which operates travel brands such as Flight Centre, Travel Money Oz, Cruiseabout and My Holiday Centre, said Australian leisure travel was tracking “at or near pre-covid levels”, despite skyrocketing cost of living pressures.

It said demand was holding up despite inflation and expensive airfares as a “high percentage” of its leisure customers “are regular travellers and not subject to mortgage stress”.

Flight Centre managing director Graham Turner said: “Flight Centre’s business is leveraged towards demographics that are less affected by mortgage stress, specifically the luxury sector and Baby Boomers, and who are therefore more likely to continue to travel.”

Mr Turner has been outspoken on current conditions in the Australian flight market and in its results the company said airfare prices are starting to stabilise and are “tipped to decrease modestly in near-term” due to a return of competition and capacity.

Leisure customer research conducted by the group in June revealed 72 per cent of Australian travellers intend to take more than one domestic trip and 88 per cent intend to holiday internationally in the next 12 months.

However, the results reveal that business travel has been slower to return, and is not yet at pre-pandemic levels.

London remains the most popular international destination for Australians but the company reported recent increases in Australians heading to Japan, Indonesia and Thailand.

According to the International Air Transport Association (IATA), international air traffic was at 90 per cent of pre-covid levels in June 2023, having started the year at 68 per cent.

The IATA expects a full global recovery to pre-pandemic travel levels during 2024.

There was additional good news for Flight Centre shareholders with the group announcing an 18¢ a share fully franked dividend, its first since the pandemic.