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14 November, 2022

Flight Centre reveals 246% boost for Q1, says farewell to industry legend

By Alexandra Coulton

Flight Centre has just hosted its first in-person AGM since 2019, revealing a strong recovery and the retirement of an industry legend.

The company’s CEO Graham “Skroo” Turner revealed Flight Centre had seen a 246 per cent increase in group TTV since this time last year with the four months to 31 October amounting to a cool $6.8 billion.

Revenue increased at a similar rate to TTV – 248 per cent – to $667 million, which meant that revenue margin remained steady year-on-year at 9.8 per cent, despite being adversely impacted by reduced front-end commission payments from some airlines in Australia and New Zealand from 1 July, according to Skroo.

“We anticipate that these changes are adversely affecting overall leisure revenue margins by circa 1 per cent in Australia, given that we are partially offsetting the impact through a combination of revenue margin improvement strategies and by securing better arrangements with those carriers who are keen to work closely with us during the recovery phase,” he said.

From 1 July, Qantas cut commissions on international airfares from 5 per cent to 1 per cent, and Malaysia Airlines halve its commission from four to two per cent.

In terms of bottom-line results for the four months to 31 October, the company recorded an underlying $61 million EBITDA profit, a strong turnaround from the $137 million underlying EBITDA loss during the PCP; and broke even on an underlying profit-before-tax basis, after delivering a $194million loss before tax during the PCP.

All geographical segments, with the exception of Asia, were profitable on an underlying EBITDA basis for the first quarter, with ANZ and EMEA profitable on a PBT basis.

During the same period, Flight Centre’s corporate businesses saw a record Q1 TTV contribution of $2.6billion – 184 per cent year-on-year growth.

Its leisure businesses also showed a strong recovery with $3 billion in TTV, a 608 per cent increase on the $417 million result during the PCP; and an underlying $23million EBITDA profit, a significant turnaround on the $102 million underlying EBITDA loss during the PCP.

“Looking at Australia, outbound travel – our leisure business’s core product – grew strongly and consistently year-on-year pre-COVID throughout similar economic cycles and at significantly higher interest rates than today’s, supporting our longstanding view that travel is not generally considered discretionary and is more often regarded as a necessity,” Skroo added.

These results followed Flight Centre’s “modest” second-half profit to round out FY22, despite a before-tax loss of $377.8 million.

Flight Centre chairman Gary Smith also revealed the company’s supply CEO and all-around industry legend Melanie Waters-Ryan will retire at the end of FY23.

Smith said Waters-Ryan plans to take a well-earned break after 35 years with the company.

“Mel started her career with us back when Joh Bjelke-Petersen was premier as a leisure travel agent just across the river from here in our Flight Centre Queen Street shop, after travelling through Europe,” Skroo said of Waters-Ryan’s retirement.

“Mel then became a team leader – at Toombul from memory – and continued her career progression on a path that ultimately led to her becoming Australian managing director, global chief operating officer and global CEO of our leisure and supply divisions.

“Along the way, Mel was instrumental in the creation and/or expansion of many of our highly successful product businesses, including Infinity, Flight Centre Global Product and GPN.

“As Gary said, she will leave a wonderful legacy and she will be missed.”

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agm flight centre gary smith Graham 'Skroo' Turner melanie waters-ryan