Join our daily newsletter At The Bell to receive exclusive market insights
- Flight Centre Travel Group (FLT) shares are up this morning as it begins a tentative recovery following the COVID-19 pandemic
- In its first half of the 2021 financial year, the company posted a $233 million loss, compared to a pre-pandemic profit of $22 million in the previous corresponding period
- Revenue came in at nearly 160 million, down 90 per cent from last year’s $1.5 billion
- However, the travel group has seen some positive signs
- Revenue reached a COVID-period record of $33.5 million in December, which is normally considered one of the industry’s quietest trading months
- Despite the positive sign, Flight Centre has not provided any guidance for FY21
- On the market today, Flight Centre is up 7.04 per cent and is trading at $17.49 per share
Flight Centre Travel Group (FLT) shares are up this morning as it begins a tentative recovery from a pandemic-induced downturn.
The travel group has released its first half year results, which have shown some gradual improvements, despite the ongoing COVID-19 pandemic.
Flight Centre posted a $233 million loss for the period, compared to a pre-pandemic result of $22 million profit a year earlier.
Revenue came in at nearly 160 million, down 90 per cent from last year’s $1.5 billion.
Since the onset of the coronavirus crisis last March, Flight Centre has lowered its cost base by 66 per cent and continued to generate total transaction value (TTV) and revenue.
TTV was just 12 per cent of the previous corresponding period, at $1.5 billion, with the majority of the funds coming from the corporate department.
In the corporate sector, Flight Centre’s global businesses delivered $823 million of TTV in the first half. Recovery during the period was more rapid in Australia, trading at 30 per cent of the prior year TTV.
Positive signs
While the results aren’t the best, Flight Centre has seen some positive signs.
Revenue reached $33.5 million in December, a company record in under the pandemic, despite the month usually being one of the quietest industry periods.
The company saw growth in leisure travel once interstate borders opened, including a bounce when Queensland opened its borders to NSW and Victoria on December 1.
Key markets, such as USA, U.K., and Australia now have vaccination programs underway, which could bode well for Flight Centre near-term prospects.
Notably, British Prime Minister Boris Johnson recently outlined his plans to remove most restrictions by June 21. This could see domestic restrictions in the U.K. lifted by April 12 and international travel permitted by mid-May.
“The conditions we have encountered since March last year have undoubtedly posed the greatest challenge that our industry and many others have faced,” said Managing Director Graham Turner.
“Rather than enter a holding pattern ahead of future domestic and international border reopenings, we are taking steps to ensure we are well placed for the eventual recovery,” he added.
What’s next?
The company believes its timeframe of recovery is still largely dependent on government policies and the success vaccination programs success. Consequently, Flight Centre has not provided any guidance for FY21.
In Australia, sales slowed in January, as state borders closed and tighter travel restrictions were applied. The Government has indicated that Australians could all be vaccinated by the end of the year.
While over in America, more people have now been vaccinated than have tested positive for the virus, and infection rates are falling.
“Based on what we have seen so far, travellers have been keen to take off as soon as they have been allowed to do so, which should ultimately lead to a very solid rebound,” Graham concluded.
On the market today, Flight Centre is up 7.04 per cent and is trading at $17.49 per share at 12:22 pm AEDT.
