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- Flight Centre has released its first quarterly report for the 2020 financial year to the market today
- While online sales for the travel company saw massive growth this quarter, overall profits are down on last year
- Flight Centre said overseas travel uncertainty and increased company costs are to blame for the profit drop
- Shares in Flight Centre are down 12.18 per cent to trade for $41.45 each
It seems huge growth in online sales for Flight Centre Travel Group isn’t enough to satisfy the market today.
The travel and leisure company released its first quarterly report for the 2020 financial year this morning, and lower profits compared to this time last year left a stain on the otherwise healthy quarter.
According to the company, trading conditions in Australia — particularly in the leisure business — deteriorated significantly towards the end of the 2018 calendar year.
The report cited uncertainty and unrest in other countries as a contributor to this deterioration, largely due to the impact of Brexit in the U.K. and travel safety concerns in the U.S.
On top of this, Flight Centre has also garnered some heavier costs for the first few months of the 2020 financial year. The company introduced a new wage model in October 2018, resulting in an extra $4.2 million in wages being paid this quarter compared to the same time last year.
The report also explained that while the collapse of U.K. travel giant Thomas Cook just last month had a minimal impact on Flight Centre, it did cost the company $7 million to re-accommodate customers affected by the collapse of Bentours and Tempo Holidays in Australia.
But it’s not all bad news for Flight Centre.
Online leisure sales in Australia doubled during the first quarter of the new financial year compared to the same time last year.
More specifically, Jetmax sales — which includes BYOjet and Aunt Betty — soared 145 per cent to bring in $135 million for the company, and flightcentre.com.au sales rose 65 per cent to rake in another $120 million.
Flight Centre Managing Director Graham Turner said this is good news for the company, despite the falling profit.
“While online sales represent a relatively small percentage of our leisure TTV [total transaction value], the growth we are recording is a positive sign,” Graham said.
The market, however, isn’t as optimistic as Graham.
Flight Centre shares are 12.18 per cent in the red just after midday trading today, currently worth $41.59 each in a $4.2 billion market cap.
