Flight Centre cuts jobs, streamlines APAC operation

The Flight Centre Travel Group has claimed its “on track” to achieving top profits this financial year, despite some setbacks in the Aussie market which saw a number of roles made redundant.

As a result, Flight Centre has announced a new business transformation initiative to fast-track revenue growth and reduce costs globally.

This focus has already led to some changes in the business, including streamlined support structures in Australia and Asia, and a number of redundancies in mid to high-level roles.

A spokesperson from Flight Centre confirmed to Travel Weekly that about 35 support roles were included in the redundancies, however some of these are retirements and quite a few have not yet finished.

Chief Operating Officer Melanie Waters-Ryan, who also served as the leader of Flight Centre’s Aussie business, is heading Flight Centre’s business transformation full-time, with MD Graham Turner now overseeing the Aussie leadership team.

Flight Centre has also revealed in an updated guidance for its financial year results that a global DMC and hotel management could be in the pipeline to help capitalise on opportunities and add to its bottom line.

Flight Centre updated its 2017 financial year guidance, suggesting it expects to earn an underlying profit before tax of between $325 million and $330 million for the year to June 30 2017.

It comes after a disappointing first half of the financial year, which saw the Group achieve $113 million pre-tax profits, compared to $146.3 million the year before.

Managing Director, Graham ‘Skroo’ Turner, said a disappointing first half of the financial year saw a somewhat slower start down under, however it’s still expecting to make strong profit.

Turner said results in Australia and NZ had improved in the second half of the financial year, admitting average international airfare prices locally dropped seven per cent during the first half of the year, as a result of widespread discounting in 2016.

“While we always aim to improve on the prior year result, our achievements during the second half reflect a solid recovery after a challenging first half, which saw a combination of internal and external factors affect results,” he said.

Turner said the while in-destination offerings – including tour operating businesses and the Buffalo Tours destination management company (DMC) were relatively small in the scheme of the business, there are still big opportunities.

“Opportunities include developing a global DMC offering and expanding into hotel management in some key markets globally.

“In these and other areas, we can leverage the strength of our global distribution network, which sends millions of travellers away for holidays or for corporate travel every year.”

Looking globally, however, Turner said the company’s second half profit growth had been bolstered by strong results in North America, Europe, the Middle East and Africa.

Turner noted that despite ongoing political uncertainty in the UK, Flight Centre’s UK operation will deliver another record profit in local currency, although serious drops in the British pound’s value might affect how that looks in Aussie dollars.

“To improve performance globally, we have focussed on factors that are within our control,” Turner added.

“Specifically, generating strong sales volumes to offset falls in international airfare prices.

“In Australia and in some other markets, international ticket sales growth has comfortably outpaced the growth in outbound travel.

Turner said he hopes to focus on enhancing productivity, containing and reducing costs, and “generally making it easier for customers to interact and transact with our brands and people across all channels”.

Turner added, “Growing our online capabilities and sales has been a priority and we have successfully achieved this goal, with StudentUniverse, byojet and flightcentre.com.au making solid contributions to another record global sales result.”

Flight Centre recently released the inaugural Turner Report on current travel trends, while the company also signed a new corporate travel venture with Airbnb.

Image: Australian Institute of Business

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

Latest comments

sting says:
July 6, 2017 at 9:50 am
….the turner report published a couple of weeks ago boosted agents morale when it said more and more travellers are using agents….. well, those were words… this is reality… and the truth isn’t pretty…
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Maxwell Smart says:
July 5, 2017 at 1:34 pm
FC profits down 23% !!! What does that tell you ? Airlines are discounting like crazy & should cut capacity instead, then again had to send out 1/2 of an A380/B777. The B787 is certainly the future in these very rough economic times/recession the world has to have. Wonder how many airlines will fold in next 12 months ? Dozens probably.
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