The Flight Centre Travel Group Ltd (ASX: FLT) share price is down 4.32% to $19.26 after releasing its first-half results.
Keep up to date with the February 2022 reporting season calendar.
FLT share price
Never waste a crisis
Key financial results for the half ending 31 December include:
- Total transaction value (TTV) of $3.3 billion, a 113% improvement year-on-year (YoY)
- Revenue of $316 million, up 98% YoY
- Underlying EBITDA loss of $184 million, down from a loss of $156 million in the prior year
Flight Centre continued to be plagued by the return of COVID-19 restrictions over the half.
Positively, when cases and restrictions did ease, demand returned quickly.
All regions – ANZ, Americas, Asia, and EMEA – achieved meaningful growth, which led to a narrowing of geographical EBITDA losses.
The more than doubling of TTV is the result of new client account wins in the Corporate segment and Leisure travellers regaining confidence.
The underlying EBITDA result is masked by $65 million in additional JobKeeper receipts in the prior period. Once stripped out, Flight Centre actually reduced its costs year on year.
Over the past two years, Flight Centre has dramatically cut its cost base by 56% to become a leaner business post pandemic.
But to what extent travel returns is the big unknown.
Margins squeezed
Airlines, such as Qantas Airways Limited (ASX: QAN), have been hit hard by the pandemic.
Therefore it’s little surprise airlines have begun to reduce commissions to intermediaries such as Flight Centre and Webjet Limited (ASX: WEB) as flying resumes.
This will likely impact Flight Centre’s revenue margin going forward.
The business said it will work with travel partners to mitigate the impact of pricing changes.
What’s next for the Flight Centre share price?
The Flight Centre share price will be buoyed today by extremely bullish commentary from management.
Omicron cases are subsiding. Subsequently, travel restrictions are easing. And there is significant pent up demand from customers.
As a result, TTV is beginning to accelerate, with February leisure and corporate bookings 50% above January.
Corporate is expected to return to profitability in March to April, with a return to pre-pandemic TTV in FY23.
Leisure will take longer to rebound when international travel returns in a more meaningful way.
“Travel will inevitably be more complex in the post-COVID recovery, given that government and airline policies vary, and this will play to the strengths of our expert travel advisors…”
