Flight Centre upgrades forecast FY23 profit guidance based on recovering market

Flight Centre Travel Group (ASX: FLT) has announced an upgrade to its profit guidance for the 2023 financial year.

Based on preliminary trading data, the business now expects to report underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $295 million and $305 million for the 12 months to end June.

The new midpoint of $300 million represents a 7% increase on the midpoint of the company’s previous EBITDA range of between $270 million and $290 million.

It is a $483 million turnaround on an underlying $183 million loss recorded in the previous corresponding period.

Total transaction value (TTV) for the 2023 financial year is expected to be around $22 billion, representing a growth of almost 115% on the previous year’s value of $10.3 billion.

It will be the company’s second strongest full year result after the 2019 financial year, when it posted a total transaction value of $23.7 billion.

Global corporate travel

Flight Centre’s global corporate travel business continued to outperform during the year, delivering record TTV in a market which is reported to have “generally improved but has yet to fully return” to pre-pandemic levels.

Corporate transaction values for the 2023 financial year are expected to reach $11 billion, which represents more than 20% growth on the previous TTV record of $8.9 billion in 2019.

This figure reflects a gradual recovery in client activity following the removal of COVID-related travel restrictions; as well as a multi-billion-dollar pipeline of new accounts won across the FCM Travel and Corporate Traveller brands during the pandemic.

Global leisure TTV for the current year is expected to be around $10 billion, following a strong and consistent recovery during the second half of the year.

Continued recovery

Flight Centre managing director Graham Turner said he was pleased with the continued recovery across the group’s leisure and corporate travel businesses.

“In corporate, we have delivered record TTV while investing significantly for the future by securing large volumes of new accounts, expanding our sales force and introducing innovative new platforms and products for our customers, which should lead to stronger returns in the years ahead,” he said.

“In leisure, we are emerging from the pandemic as a more productive, more efficient and more diverse business with a strong brand stable, enhanced capability and efficient and productive models that are now starting to achieve scale benefits.”

Luxury leisure travel

He said the company was benefitting from the acquisition of UK-based luxury leisure travel business Luxury Travel Holdings Limited (Scott Dunn) in February and the purchase in May of events business Luxperience.

“Looking ahead, we expect that leisure travellers will continue to prioritise holidays and experiences over other areas of discretionary spending, as we have seen in the past and as evidenced by the consistent year-on-year growth in outbound travel in large and important markets like Australia,” Mr Turner said.

“In corporate, we expect the large volume of new business we continue to win from competitors and accounts which were previously unmanaged will offset the impact on TTV flowing from lower-than-normal client spend.”