Flight Centre has soared back after the pandemic with its FY23 earnings before interest, taxation, debt, and amortisation (EBITDA) of $301.6 million, a $485m turnaround from FY22’s $183.1m loss.
The result hits the mid point of Flight Centre’s predicted profit of $295-$305m.
Flight Centre said that its strong profit recovery was attributable to a 112 per cent total transactional value (TTV) uplift to $22billion, the company’s second strongest result behind FY19 ($23.7billion). It also cited efficiency gains within the company and solid cash generation and cash flow which has paved the way for an 18 cents per share fully franked dividend that the company will give to shareholders.
FY23 results were heavily 2H weighted, with almost 70 per cent of underlying EBITDA generated during the six months to June 30, 2023. Flight Centre attributes this to improved market conditions after travel restrictions were removed globally, improved industry dynamics, specifically airline capacity growth, and normal seasonality.
Flight Centre’s managing director Graham ‘Skroo’ Turner said he was thrilled with the turnaround following a tough time for the company.
“After an incredibly challenging period, we are pleased to report material profit and sales uplifts improved conditions during FY23, leading to stronger shareholder returns,” Skroo said.
“Our $485million profit turnaround exceeded our initial expectations as our diverse global business benefitted from the removal of unprecedented restrictions that were imposed on travellers for some two-and-a-half years and from the strategies that we implemented to preserve our key assets and ensure we re-emerged in a position of strength.”
In Australia, outbound capacity reached 85 per cent of pre-COVID levels at year-end, with near term increases expected from key airline partners including Emirates, Singapore Airlines, Qantas, China Southern and Cathay Pacific.
Flight Centre said it also strongly supports yet-to-be-approved plans by other airlines, including Qatar Airways and Turkish Airlines, to increase traffic to Australia to boost tourism and to deliver cheaper airfares to travellers.
Going forward, Flight Centre expects more favourable industry dynamics for travellers as competition on international routes increases and as airfare prices gradually start to decrease more significantly, further leisure and corporate TTV growth and gradual revenue margin increases and further cost margin decreases, particularly in corporate.
“Looking ahead to FY24, we are well placed to capitalise on opportunities that will arise as industry recovery continues,” Skroo said.
“Already, we have seen further solid TTV and profit growth in early trading in a resilient travel market that seems to be holding up reasonably well compared to other sectors.”
