Profit before tax down 5.8% to $345 million in “challenging trading climate”.
Flight Centre has just released its results for the year to 30 June, with TTV surging $1.7 billion to $19.3 billion but profit declining due to airfare price wars, higher capital expenditure, underperformance in some regions and “multi-million dollar investments in initiatives to drive longer term growth”.
MD Graham Turner said the TTV increase was across all countries and regions, and meant that on average the group sold $50 million worth of travel every day during the year.
He unveiled plans to fast track growth in six key sectors, including leisure and corporate travel, student/youth and in-destination travel experiences. The company will also significantly expand online during FY2017, developing a “global online presence by launching transactional websites in Europe, Asia, the UAE and South Africa” complementing the existing online businesses in Australia, New Zealand and the Americas.
Strong competition between airlines during the second half of the financial year meant Flight Centre did not achieve the level of dollar-based sales incentives (super over-rides) it expected. Turner said average international airfares decreased 4% in Australia.
The company also incurred an unforeseen $3 million loss on foreign exchange contracts, predominantly relating to its Top Deck and Back-Roads Touring businesses and as a result of the significant currency devaluations following the 23 June Brexit referendum.
Looking forward Turner said conditions remain volatile, and declined to provide profit guidance “given the uncertain environment, low airfare yields and ongoing investments. The company expects to boost its sales staff numbers by 6-8% this financial year, which will see the global Flight Centre workforce exceed 20,000 people working in 3,000 businesses.
More details in today’s issue of Travel Daily.