Travel Agents

Flight Centre posts $234m loss, but grows its share in “large and important” Aussie leisure market

Huntley Mitchell

Huntley Mitchell

Flight Centre Travel Group (FCTG) is witnessing positive signs in the recovery of its leisure businesses, despite recording a significant half-yearly loss.

The company posted a $233.5 million loss in the six months to 31 December 2021, compared to a $22.1 million profit in the previous corresponding period.

FCTG’s overall revenue dropped a whopping 90 per cent in the first half of FY21 to $160 million, and total transaction value (TTV) plummeted 88 per cent to $1.5 billion.

But, the ASX-listed group did manage to increase its share in “several large and important leisure markets” over the six-month period, including Australia and South Africa, through “enhanced omnichannel offerings”.

Industry booking data shows the Flight Centre brand captured 16 to 18 per cent of total GDS segments booked in Australia during November and December 2020, compared to 15 to 16 per cent during the prior corresponding period and despite a “materially different sales mix”, FCTG noted.

Domestic tickets represented 94 per cent of the group’s total ticketing volume in Australia during the first half of FY21, compared to 57 per cent during the prior corresponding period.

In total, FCTG issued 35,000 international tickets in Australia during the six months to 31 December at a time when, according to the Australian Bureau of Statistics, just 86,000 residents travelled overseas for short-term departures.

FCTG’s global leisure businesses generated $501 million in TTV during the first half of FY21, which the company said was heavily weighted towards Australia and South Africa, “businesses that have significant exposure to the domestic travel sector”.

“As announced previously, the leisure businesses, which span seven countries, were part-way through a transformation program – focusing on Flight Centre brand and new and emerging models and channels – when the COVID-19 crisis unfolded,” the company said.

“Work has accelerated on this program, with the company focusing on maintaining costs at a sustainable level, while optimising its shop networks for Flight Centre, Liberty and the premium Travel Associates and Laurier Du Vallon brands, and investing in sales centres, independent contractor offerings and self-service/e-commerce businesses to maintain and increase market share.”

FCTG said it has worked to maintain its leisure reach by rebalancing its sales channels to reflect changing customer needs and preferences, while also lowering costs.

“The company’s brand stable and shop networks have been right-sized, with what was initially intended to be a three-to-five-year reduction program completed in 12 months, while other channels have been enhanced and upsized to capture a larger share of overall sales,” it said.

“Work has also continued on the Flight Centre brand rejuvenation plan, which has seen its offering modernised and its omnichannel capabilities enhanced.

“The company saw rapid sales recovery when border restrictions were eased and has successfully increased market share in a subdued trading climate.

“Solid recovery in online sales, which was expected in a domestic-only trading environment, has contributed to this market-share growth, with daily domestic sales on flightcentre.com.au reaching record levels when Australian borders were open during the 1H.

“Shop-based sales have, however, continued to comfortably account for the majority of leisure sales globally.

“In addition, FLT’s leisure consultants have worked tirelessly to help customers receive refunds or rearrange their travel plans since border restrictions were imposed.”

In Australia alone, the company’s consultants have secured more than $1.3billion in refunds from suppliers for their customers for no revenue.

In its half-year results announcement, FCTG highlighted its $1.2 billion liquidity runway as one of the key factors in the company’s success in “weathering the unprecedented COVID-19 challenge”.

FCTG chief financial officer Adam Campbell said decisive actions taken during the past 12 months, including a $700 million equity capital raising and a $400 million convertible note issue, as well as restructuring global teams and streamlining business operations, had given the company and its key brands a strong platform during a challenging period.

FCTG is targeting a return to break-even in both leisure and corporate travel during the 2021 calendar year “on the basis that domestic borders are likely to open permanently and some (low-risk) international travel may be permitted”.


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