Selling More, Making Less: Flight Centre Downgrade

Record low airfares in several countries ate hitting the bottom line at Flight Centre, which says its consultants are working harder for less, resulting in a profit downgrade.

Australia’s biggest travel retailer is also being hurt by political uncertainty in the US and Britain, adverse currency movements, and lower profits from its Back Roads and Top Deck touring brands.

“In Australia, widespread airline discounting has seen the average international fare sold by FLT during the first half of FY17 decrease about 7% compared to the same period of FY16 following a 4% decline during the second half of last year,” the company said.

“In a challenging trading climate globally,” Flight Centre said,  “underlying profit before tax is expected to finish between $320m and $355m for the full year (FY16: $352.4m), with a subdued first half likely to be followed by a stronger second half.

Growth drivers from January on include:

  • Increase in airfares with volume maintained
  • Improved European (UK) trading results as the implications of Brexit crystallise
  • Tighter cost controls

Flight Centre become the third major Australian travel company to report tough market conditions following underwhelming updates from Qantas and Virgin Australia last week.

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