Skroo disappointed in Flight Centre slump

Skroo disappointed in Flight Centre slump
By Hannah Edensor


Flight Centre’s managing director Graham Turner has expressed his disappointment in the net profits for the half year to December 2016, which saw a massive 36.2 per cent drop, while revenue fell almost one per cent.

The travel giant’s piggy bank saw a $74.4 million net profit, with revenue pulling in $1.25 billion.

But it wasn’t all sour grapes, with the Australian market’s total transaction value topping $5 billion for the first time thanks to strong ticket sales.

Australia also performed well in a number of key sectors, including hotel room nights, cruise, FX, adventure travel, corporate account wins and the youth sector.

It comes during a time of turmoil for the travel industry, including widespread airfare discounting, economic uncertainty and a volatile exchange rate.

CEO and managing director Graham Turner said these market conditions had weighed heavy on the agency’s shoulders, and masked some of their achievements during the period.

“While we were disappointed that our record sales didn’t translate to record first half profits, our $113.2 million underlying profit before tax was a decent outcome, given the conditions,” he said.

“Currency headwinds had a significant impact and particularly affected UK result translation, with a GBP500,000 first half profit increase translating to a $AU3.9 million first half profit before tax decrease.

“Widespread airfare discounting, particularly on Australian outbound routes and in the USA, New Zealand, Singapore and India, also impacted short-term results.

“The discounting, which was driven in Australia by rapid airline capacity growth during the 2016 calendar year, has delivered unprecedented airfare bargains to our customers, but has affected Total Transaction Value and revenue comparisons, given that fares were higher during the FY16 first half.”

But on a more positive note, Skroo added, “Productivity is improving and our record ticket sales again underline the strength, relevance and diversity of our offerings and of our omni-channel network.

“These are encouraging signs and mean we are well placed to benefit when conditions stabilise.”

Meanwhile, Air New Zealand recorded a slide in profits also, down from $457 million to $349 million, and Qantas plummeted 25 per cent in net profit. Webjet on the other hand, reported record profits almost four times its previous half year results.

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

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