COVID-19 destroys Flight Centre profits.
Flight Centre Travel Group has just released its formal full year accounts for the year to 30 June, confirming an update two weeks ago indicating the massive impact of coronavirus on the business.
The statutory result was a loss of $849 million, while the underlying loss before tax was $510 million, incurred entirely during the March-June period described by the company as “the most challenging trading environment the company has experienced”.
Overall Total Transaction Value (TTV) was down 36% to $15.3 billion, with the company recording minimal sales through the quarter as forward leisure bookings were cancelled and the transactions reversed.
As previously flagged the Flight Centre global corporate business “underlined its strength, diversity and resilience” by delivering an underlying profit of $74 million on $7 billion in TTV, comprising 45% of the company’s overall sales.
CEO Graham Turner said “COVID-19, and specifically government responses to it, have created the most challenging trading environment that we have experienced in our almost 40 years in business”.
“Until the past four or five months we had not seen – and could not have imagined – a scenario in which virtually all flights and travel plans globally would effectively be grounded for an extended period.”
Despite the devastation wreaked by the pandemic, Turner noted that travel was starting to gradually recover in locations like North America, Europe and South Africa where domestic borders are now open.
He said Flight Centre had the capacity to service about 40% of its normal TTV with its current reduced cost base “which means we will be able to reach a break-even position without incurring significant expenses”.
Through the period of disruption the company has continued to focus on its longer term leisure transformation, which had initially been intended to focus on the flagship Flight Centre brand over the next few years, but has now been fast-tracked to include “new opportunities and growth models”.
These include growing online sales through Flight Centre, Jetmax and StudentUniverse, growth in the premium/luxury sector and “developing a leading commercial, product and technical offering tailored for independent travel entrepreneurs (home-based agents),” Turner said.
More details in today’s issue of Travel Daily.