Flight Centre is stacking up sales, with reports that it will acquire five separate travel groups both at home and internationally.
Despite the leisure sector sorting through tougher times, news from The Australian quote managing director Graham Skroo Turner saying the acquisitions would cost as much as $50 million, but that he was confident two or three of these purchases would come through for the company in the short term.
“Probably in the next year two or three of these (deals) will come to fruition,” Skroo said, adding they “will contribute to our company.”
Flight Centre’s acquisition spree comes despite a slow in outbound travel growth, per The Australian, which in the past year sagged 2-3%, well down on the 7% produced from 2013/14.
“It’s certainly a bit quieter but it’s still a growth market. We have plenty of opportunity to take market share off other people,” Skroo said.
But despite adding international travel specialist Top Deck to its basket last year, as well as a corporate travel group in Mexico earlier this year, Flight Centre has no plans to nab troubled competitor Helloworld, according to The Australian.
The Qantas-backed company produced a profit of just $6.9 million for the year to 2015, but while this was a solid turnaround against a $1.7 million loss the year before, was not enough to tempt Flight Centre.
“Obviously we heard about it and we thought about looking at Helloworld and decided against it,” Skroo said.
“I don’t think it falls into our portfolio. It would have been a bit of a distraction, but we are looking at others that are smaller and more strategic for us.”
Apart from a slowing outbound market, Flight Centre was also hit by lower leisure travel margins.
The travel agency said it had also heavily invested in new systems and strategies as well as a new wage structure for front-end consultants, at significant cost to the company.
And as a result of stopping short of its ambitious profit targets for 2015, Flight Centre’s senior exec salaries were slashed, including that of Skroo, The Australian reported.
Per Flight Centre’s 2015 annual report, Skroo’s total remuneration was $518,238, down on the $657,073 he earned in 2014.
But as the owner of the global brand, he also raked in more than $23 million in fully franked dividends this year from the 15.244 million shares he owns in the company. Not too shabby.
“It’s not that unusual (to have a low base salary) when you have a significant parcel of shares in the business,” Turner said.
Flight Centre’s chief operating officer, Melanie Waters-Ryan, took home a pay packet of $986,127 in 2015, down from $1.082 million the previous year, while executive general manager Rob Flint received $580,068, down from $795,219.
“The average Flight Centre senior executive earned less during 2015 when bottom-line results did not meet initial expectations,” the company stated in its annual report.
Skroo has long been judged one of Australia’s best value CEOs, and was identified as the second lowest paid CEO in an ASX S&P 100 company for the 2014 fiscal year.