Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Low airfares dent Flight Centre's profit

Petrina Berry  |  24 Aug 2017Text size  Decrease  Increase  |  

Page 1 of 1

BRISBANE - [AAP] Significantly lower airfares and political uncertainty were behind travel agent Flight Centre's (ASX: FLT) 6 per cent fall in full-year profit to $230.8 million.

Flight Centre co-founder and chief executive Graham Turner says price competition during the first half of the 2017 financial year was the most challenging with the group "advertising some of the cheapest international airfare deals" it has ever offered.

Adding to its first-half woes was political uncertainty sparked by the United Kingdom's Brexit vote, and US and Australian elections which resulted in subdued trade.

Flight Centre said the low-fare environment had begun to normalise in Australia during the second half of the financial year.

Underlying profit before tax in the second half rose 4.7 per cent, staging a dramatic turnaround from the first half's 22.4 per cent fall.

"In terms of airfare pricing, Flight Centre currently expects a more normal trading environment during FY18 in Australia, with modest decreases or increases in average fares, rather than steep declines across the board," Mr Turner said.

Mr Turner said the lower airfares did boost ticket volume growth with total transaction value (TTV) growth hitting a record $20.1 billion in 2016/17, up from the prior year's record of $19.3 billion sales.

In Australia and New Zealand, sales increased in both leisure and corporate travel, with the company achieving record ticket volumes and record room nights.

International ticket sales in Australia increased 10.5 per cent, well above Australia's official 4.1 per cent outbound travel growth rate.

The group's Americas business accounted for about 10 per cent of Flight Centre's profit thanks to record profit from the US and Canada's strong turnaround.

The company's underlying profit before tax of $329.5 million hit the top end of its guidance released in July but was at the lower end of its initial target of $320 million to $355 million.

Shares in Flight Centre had jumped $5.20, or 11.7 per cent, to $49.57 at 1230 AEST.

FLIGHT CENTRE PROFIT FALLS:

* Profit down 5.6pct to $230.8m

* Revenue up 1.3pct to $2.7bn

* Fully franked final dividend of 94 cents, up 2 cents

 

AAP logo image

© [2017] Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.