Cheap airfares still driving demand for FLT

Cheap airfares still driving demand for FLT
By admin

Australia will continue to be the "engine room" of growth for Flight Centre as the company posted an 8% rise in pre-tax profit to $129.5 million in the first half of the financial year.

The result came despite "mixed consumer and business confidence globally" although the retailer said that airfares remain in freefall and are driving demand.

Compared to five years ago, flights from Sydney to Phuket are down 26%, to New York by 19% and to Singapore by 51%, Flight Centre said.

In addition, the company said it will step up its marketing of premium cabins which, based on today's salaries, are priced about the same as economy fares in the mid 90s.

If the current growth is maintained the retailer will deliver a year-end PBT of $314m, towards the top end of previously released forecasts.

Total transactional value climbed 7% to $6.6 billion with net profit after tax rising 13% to $91.8m.

In Australia, TTV increased 9% with earnings before interest and tax hitting almost $103 million.

With such a rise in TTV, Turner questioned assertions that the market is "flat".

"Australia and the UK are now entrenched as the company's largest and second largest profit generators and again delivered record EBIT in challenging trading conditions to underpin FLT's overall growth," he said.

"Our Singapore and Greater China businesses also contributed record first half EBIT which helped FLT comfortably surpass the profit milestone that was established last year.

"In addition, a first half sales record was established. While some leisure businesses grew strongly, including Australia's niche brands, corporate growth was generally stronger."

Turner said that while currently trading ahead of its full year target, maintaining 10% PBT growth "will become more challenging as the year progresses and the company tracks against its largest profit months".

The retailer also provided an update on its "blended model" which combines offline and online bookings.

Phase three of the plan will see the retailer "unveil a fully integrated offering that allows customers to switch seamlessly between the two channels".


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