The Flight Centre Travel Group Ltd (ASX: FLT) share price is up 3% after the ASX travel share revealed a strong FY23 trading update.
Flight Centre sees soaring demand
The company gave a presentation today which showed that the business and the industry has taken further steps on the path to a full recovery.
It said that it’s tracking “comfortably within guidance range” ahead of the key May and June period. The company is now targeting underlying EBITDA (EBITDA explained) of between $270 million and $290 million, including the Scott Dunn acquisition.
Flight Centre said that travel demand is “holding up strongly”, with a post-COVID record for total transaction value (TTV) in March 2023, 6% above the March 2019 result.
The business revealed that both its leisure and corporate businesses each delivered TTV contributions of over $1 billion, the first time ever in a month.
Flight Centre also said that the underlying profit margin is improving, with the underlying cost margin now at a historic low. The ASX travel share said this reflects permanent and structural cost base changes since early in the pandemic, with growth in lower-cost, highly scalable models.
It said that the revenue margin is consistent with the first half, impacted by rapid growth of its lower margin businesses, as expected. This impact will be “offset by cost margin reductions and other margin improvements strategies.”
The company also talked about its balance sheet. It noted a $200 million increase in cash and investments during the third quarter of FY23. Flight Centre continues to invest in key growth drivers, while a capital management review is underway, with a focus on medium-term shareholder returns.
Final thoughts on the Flight Centre share price
Flight Centre shares have soared over 40% in 2023. Investors are clearly reacting to the resurgence of demand for travel which is benefiting the ASX travel share.
Could it keep rising higher? Quite possibly. But, I’d be careful about presuming this level of demand is going to continue forever. So, I’d be happy to wait on the sidelines for a cheaper Flight Centre share price.
