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- Multi billion-dollar company Flight Centre (FLT) believes it’s well on its way to recovery after facing its most challenging period in history
- The travel group posted a net loss of $287.2 million which is an improvement from last year’s $433.5 million loss
- Significantly, Flight Centre experienced a rapid recovery in Q4, driven by a rebound in total transaction volumes (TTV) across the leisure and corporate travel sectors as borders reopened around the world
- CEO Graham Turner says after two years of disruption to normal travel patterns, he’s pleased to start FY23 with a considerably brighter outlook
- Flight Centre says that it doesn’t expect a full industry recovery in FY23 but believes it can reach pre-covid levels in 2024
- Flight Centre shares end the day 4.56 per cent in the red to close at $16.55 each
Flight Centre’s (FLT) share price has dipped more than 4.5 per cent in the red after posting its financial results for the 12 months ending June 30, 2022.
The multi billion-dollar company reported a significant $287.2 million net loss, however, this is a 33.7 per cent improvement on the $433.5 million loss in the prior corresponding period.
Like all companies within the same industry, the embattled travel stock has suffered the impact of COVID-19 which sparked worldwide lockdowns two-and-a-half years ago.
In its 40-year history, Flight Centre faced its toughest operating conditions, however, based on the past few months, the travel group could well be on its way to recovery.
While the company still reported an underlying loss before interest, tax, depreciation and amortisation (EBITDA) of $183.1 million in FY22, this was well within its guidance range and was a smaller loss compared to both FY21 and FY20.
Revenue grew significantly over the year from $396 million in FY21 to $1 billion in FY22, representing a 154 per cent improvement.
By the fourth quarter of FY22, Flight Centre experienced a rapid recovery which was driven by a rebound in total transaction volumes (TTV) across both the leisure and corporate travel sectors as borders around the world started reopening and concerns around the virus started subsiding. In fact, TTV for the three months to June 30 alone topped TTV for the entire 2021 fiscal year.
“Since restrictions were relaxed or removed, demand has increased globally across both the leisure and corporate sectors as travellers have sought to reconnect with friends, family and key business contacts or to simply make up for lost travel time,” Chairman Gary Smith said.
TTV for the Leisure segment increased 197 per cent to $4.1 billion which was mainly recognised in the second half. TTV in the six months to June 30 was tracking at 68 per cent of gross monthly pre-covid levels.
As for its Corporate segment, TTV increased 158 per cent to $5.6 billion over the year, with $2.3 billion generated during the final quarter alone. The company said this TTV run-rate would, if extrapolated over the year to June 30, 2023, exceed the record $8.9 billion result achieved during FY19.
During the financial year, Flight Centre made a point to reduce costs so it could be in a position to invest in people, products and technology as trading conditions improved.
The business also raised in the order of $1.5 billion, initially through the market and then via two convertible notes. By the end of the year, Flight Centre had a global cash and investment portfolio of $1.3 billion and roughly $700 million in liquidity.
“After two years of unprecedented disruption to normal global travel patterns and other
everyday activities, we are pleased to start FY23 with a considerably brighter outlook,” CEO Graham Turner said.
“While the cost of living is generally increasing, very low unemployment globally and travel’s proven resilience are significant offsetting factors for our business, with customers having both the means and the desire to make the most of their limited vacation time after being denied that opportunity for some two years.
“Corporates also continue to re-engage face-to-face to re-establish old business relationships or to create new ones.”
Overall, Flight Centre reported that it doesn’t expect a full industry recovery in FY23, but does anticipate to be tracking close to its monthly pre-covid TTV levels by the end of the year — as long as conditions continue to normalise and given its market-share gains.
“We believe we are well placed to capture more than our share of a market that is recovering and likely to reach pre-COVID levels in 2024,” CFO Adam Campbell said.
Flight Centre shares ended the day 4.56 per cent in the red to close at $16.55 each.
