Expectations of a 10% decline in Flight Centre Travel Group underlying pre-tax profit for 2018/19.
Flight Centre has just issued an ASX update forecasting that its full year underlying profit before tax for the year to 30 June 2019 will be between $335 million and $360 million – down from the previously targeted range of $390 million to $420 million.
The company said that despite sales tracking at record levels and a strong corporate travel performance, “Australian leisure results…have not yet recovered in line with expectations as subdued trading conditions have continued to impact total transaction value (TTV) in the lead-up to the key May-June trading period”.
Benefits of new GDS systems, a new wage model for front-end sales staff, a review of the shop network and the company’s brand consolidation have “not yet been realised,” according to CEO Graham Turner.
In addition Flight Centre will record decreased interest income, higher interest payments, increased global technology costs, merger and acquisition expenses, along with higher fees for consultants and redundancy payments, Turner advised.
“Our FY19 result will highlight the challenges we are addressing in Australia but will also underline two of our great strengths – our emergence as a world leader in corporate travel and our changing earnings profile,” he said.
Turner said the business was performing well internationally, adding that while there were modest signs of recovery in Australia, with margins stabilising and increases in customer enquiry, this had not yet converted to increased bookings.
He also confirmed that next month Flight Centre would launch StudentUniverse in Australia as a specialist online travel agency targeting the youth sector.
More information in today’s issue of Travel Daily.