Flight Centre seeks to spread wings as profits rise

Flight Centre is gearing up to expand its global travel empire after record sales helped boost its first half profit.

The travel company’s net profit lifted 16 per cent to $116.7 million as its key measure of sales soared by $1 billion despite challenging trading conditions.

Its businesses in the UK, Ireland and South Africa all produced record profits while earnings rose by nearly 10 per cent in Australia.

Managing director and founder Graham Turner said Flight Centre was keen to expand in mainland China and Europe.

“After adding Malaysia and Mexico to its global network during the first half, Flight Centre is currently considering opportunities on continental Europe and in mainland China,” he said.

Mr Turner described the plan for China as a long-term one and likely to be driven by a small-scale acquisition or partnership with a local operator providing services to wealthy Chinese travellers venturing overseas.

In Europe, Flight Centre’s UK business will be on the look out for corporate travel acquisitions in the short term.

During the first half, Flight Centre’s businesses in the US and UK delivered record sales, which pushed the company’s key sales measure – total transaction value (TTV) up to a fresh high of $9.2 billion.

In Australia, TTV – the price Flight Centre sells travel products and services as an agent for airlines and tour operators – jumped seven per cent thanks to strong sales in ocean and river touring, youth touring, round-the-world flights, and business travel.

Mr Turner said while trading conditions remained volatile, he reaffirmed previous guidance to increase full year pre-tax profit by up to eight per cent.

Consumer confidence in Australia is yet to recover from a cyclical downturn late in the 2014 financial year and outbound travel has grown at a slower rate than normal.

However, cheap airfares were helping, Mr Turner said.

During the first half, Flight Centre acquired interests in youth travel business Studentuniverse.com, low-cost online travel agency BYOjet.com and aircraft charter and logistics specialist Avmin.

While Flight Centre continues to chase the student dollar, Mr Turner said travellers in his own demographic were crucial.

“We certainly believe we’ve got another 10 to 15 years of this Baby Boomer market that will dominate in that period,” he said.

“The youth is one thing because that’s also a great opportunity, but capturing these Baby Boomers before they die (is important).”

Also in the pipeline for the second half, is Aunt Betty, a package holiday website targeting people aged 25-45.

The website, expected to be fully operational by June 30, is based on recommendations from the fictional 46-year-old Betty who was born in the South Australian town of Woomera and loves to travel.

Shares in Flight Centre fell 22 cents to $40.28.

FLIGHT CENTRE FLYING HIGH

* Net profit of $116.7m, up 16.3pct

* Total revenue of $1.3b, up 15.1pct from $1.1b

* Interim dividend 60c, up from 55c

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Email the Travel Weekly team at traveldesk@travelweekly.com.au

Latest comments

Secret Flying says:
February 25, 2016 at 3:06 pm
Flight Center has like a monopoly. Typical poorly run ozzie government that allows it to happen. Seriously not cool. Their service could use a boost too. The Yanks could show them a thing or two.
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