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Tag: Flight Centre

  • Flight Centre Posts Record $25.7 Billion Transaction Value as Leisure Slips in Q4

    Flight Centre Posts Record $25.7 Billion Transaction Value as Leisure Slips in Q4

    Flight Centre Travel Group booked a record $25.7 billion in total transaction value for FY26, but fourth-quarter flight disruptions cut underlying pre-tax profit by 4 per cent to $278 million.

    Group revenue rose 2.5 per cent to $2.9 billion for the twelve months ended June 30. Statutory earnings before interest, tax, depreciation, and amortisation increased 8 per cent to $430.6 million, while underlying EBITDA climbed 3.9 per cent to $466 million.

    Middle East Flight Reductions Hit Leisure Bookings

    A $60 million earnings decline in the fourth quarter derailed what had been nine months of steady profit expansion. Managing director Graham Turner said the leisure business was tracking toward $200 million in pre-tax profit before conflict in the Middle East prompted airlines to trim flight schedules.

    Full-year leisure transaction value still rose 7.4 per cent to $12.6 billion, generating $1.4 billion in revenue. Early trading showed signs of recovery, with July transaction values setting a monthly record as seat capacity normalised on key routes connecting the Asia-Pacific region to Europe.

    Corporate Bookings Provide Buffer

    Corporate travel accounts insulated the broader business from sharper consumer pullbacks. Corporate transaction value rose 2.9 per cent to $12.7 billion and revenue gained 3.3 per cent to $1.2 billion, pushing the division’s underlying EBITDA up 24.4 per cent to $275 million.

    Small and medium business unit Corporate Traveller exceeded $5 billion in transaction value for the first time, while the group’s US operations turned in more than US$2 billion. Management is counting on its proprietary booking platforms and cost programmes to protect margins as capacity stabilises across the first half of FY27.

  • Flight Centre fined $252,000 for misleading promotions

    Flight Centre fined $252,000 for misleading promotions

    Flight Centre Travel Group has paid $252,000 in fines after misleading customers with unclear promotions during the 2018 Christmas and 2019 Easter periods.

    The travel group offered customers who spent $1500 on a holiday package during these periods a $250 voucher to use for their next holiday – though failed to disclose that the next holiday needed to be worth more than $5000 to qualify.

    According to the ACCC, over 35,000 customers received these vouchers as part of the promotions.

    “We are concerned that consumers were enticed to purchase their holiday through Flight Centre to obtain a voucher they were not able to use without spending another $5000 when this was not adequately disclosed,” ACCC Commissioner Sarah Court said.

    “Businesses are warned that the terms and conditions of any deal or promotion must be prominent so that consumers understand what is involved in redeeming the offer.”

    In addition to the fine paid, Flight Centre has also waived the $5000 minimum spend condition and has extended the redemption period for the vouchers. Those earned during the 2018 Christmas period will be extended from 30 June 2019 to 31 December 2019, while those earned during 2019 Easter will also be extended to 31 December 2019.

    The ACCC notes that the payment of a penalty specified in an infringement notice is not an admission of a contravention of Australian Consumer Law.

    Earlier this year, the ACCC also targeted online retailer Kogan for misleading promotions, stating it made “false or misleading representations about a 10 percent discount promotion”, and would be taking the retailer to court.

    The consumer rights commission alleged Kogan had advertised a 10 percent discount on certain products, though raised the price of around 600 products before the promotion began – in some cases by at least 10 percent.

    “We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual price,” Court said in a statement in May.

    “In fact, Kogan had inflated product prices which we say created a false impression of the effective discount.”

    At the time, Kogan denied the allegations, stating they ignore critical facts and matters that are relevant to the situation.

  • Flight Centre completes Canadian purchase

    Flight Centre completes Canadian purchase

    Travel retailer Flight Centre has bought a remaining stake in Canada-based corporate travel business Les Voyages Laurier du Vallon to take sole ownership of the travel business.

    The ASX-listed travel firm bought 75 percent of Quebec-based LDV in 2017 for an undisclosed sum and has now exercised its option to buy the remainder.

    “LDV has proven to be a valuable addition to our network in the Americas and we are pleased to take 100 percent ownership of the business,” said Graham Turner, Flight Centre managing director.

    “In addition to delivering solid earnings growth over the past two years, its corporate travel presence has enhanced our already strong customer offering across Canada and throughout North America in general.”

    Flight Centre has already flagged a record profit contribution of more than $100 million from its North American business when it releases its full-year accounts on August 22.

    Shares in Flight Centre were worth $45.68 before the start of trade on Monday, up 6.4 percent this calendar year.

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  • Flight Centre could see benefits from right-sizing

    Flight Centre could see benefits from right-sizing

    Amid an industry-wide effort to right-size store networks, analysts at Citi have singled out Flight Centre as a business which could particularly benefit from such an effort.

    According to Citi analyst Bryan Raymond, approximately 10 per cent of Flight Centre’s store network could be culled – largely the result of a network consolidation which has led to many locations featuring several Flight Centre stores located closely together.

    “Following Flight Centre’s brand consolidation, 83 per cent of the ~950 store bricks-and-mortar network is now branded as Flight Centre. This has resulted in a high store density for a single brand, particularly as online penetration is rising,” Raymond said.

    “Our geospatial analysis of Flight Centre’s network has identified 259 Flight Centre branded stores that are located within 1km of another Flight Centre.

    “In our view, this creates an opportunity for store network consolidation to drive higher levels of profitability through lower rent and labour costs, and the expense of [total transaction value].”

    According to Raymond, this could drive an improvement of $8 million in profit before tax over two years.

    This could be particularly helpful for the brand as the Australian leisure bricks-and-mortar industry has seen a significant contraction in the last 12 to 18 months, falling from $106 million in FY18 to an estimated $29 million in FY19.

    A Flight Centre spokesperson told Inside Retail the travel retailer instead utilises this network to create more specialised business travel teams in CBD locations, and will offer “alternatives to Flight Centre” in shopping centres with multiple stores, such as the Universal Traveller brand.

    “We close some shops every year, relocate some others and, when good opportunities arise, we work closely with landlords to secure new sites and open new shops,” the spokesperson said.

    “Within Flight Centre brand in Australia, most of these openings in recent years have tended to be specialist shops and teams, rather than traditional Flight Centre shops.”

    However, many of the factors that led to the contraction of the leisure market are unlikely to continue into FY20 and FY21, Citi argues, with the leisure bricks-and-mortar industry forecasted to rebound by $5 million, to $34 million in FY20.

    Partially as a result of this market contraction, Flight Centre recently amended its guidance for the 2019 financial year from between $390 million and $420 million, to between $335 million and $360 million – roughly a 10 per cent decrease.

    “Our FY19 results 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,” Flight Centre managing director Graham Turner said.

    “While we expect Australian leisure results to improve as short-term operational improvement plans gain traction and as longer-term transformational strategies are implemented, we also expect these trends to continue.”

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  • Flight Centre grows in Corporate Travel

    Flight Centre grows in Corporate Travel

    Australian travel retailer Flight Centre Travel Group has furthered its position in the European market, taking full ownership of corporate travel business 3Mundi, which operates in France and Switzerland.

    Flight Centre acquired 25 percent of the business in June 2017, though has worked with 3Mundi since 2015 through its FCM Travel Solutions corporate travel management network as a licensee.

    With the acquisition, Flight Centre’s corporate travel network now extends to the UK, Germany, France, the Netherlands, Ireland, Switzerland, Sweden, Norway, Finland, and Denmark.

    “France is an important business travel hub globally, and is now the world’s sixth largest corporate travel market, making it a significant future growth opportunity for our company,” Flight Centre managing director Graham Turner said.

    “We have worked closely with the 3Mundi team since 2015 and believe that this extension of our relationship will unlock further benefits – both for 3Mundi’s local customers and for FCM customers in general – and help us capitalize on this opportunity.”

    According to Turner, the deal will broaden 3Mundi’s reach, and give the business full access to Flight Centre’s corporate travel systems, products and customer offerings, while strengthening Flight Centre’s overall corporate network.

    3Mundi managing director Solenn Le Brazidec will continue to oversee the business’s day-to-day operations and has been appointed Flight Centre’s travel solutions’ general manager for France and Switzerland.

    “The incredible opportunity to wear the FCM brand for four years already has allowed us to grow and triple our turnover,” Le Brazidec said.

    “By now becoming a subsidiary of Flight Centre, we have a stronger global offering for our customers, a greater technological integration and more opportunities for growth.”

    3Mundi is not the first corporate travel business Flight Centre has invested in this year – having previously acquired a 25 percent stake in The Upside Travel Company, and becoming its largest individual shareholder.

    According to Flight Centre, during the six months to December 31, 2018, its corporate travel business generated about 37 percent of global total transactional value – about $4.2 billion.

    In late April, Flight Centre lowered its profit guidance for the 12 months to June 30, 2019, from between $390 million and $420 million to between $335 million and $360 million.

  • Flight Centre drops guidance

    Flight Centre drops guidance

    Travel specialist retailer Flight Centre has amended its previously stated profit guidance for the remainder of the 2019 financial year after poor conditions in Australia’s leisure market impacted its performance.

    The group now expects to see a profit of between $335 million and $360 million for the 12 months to June 30, 2019, below the $390 million to $420 million range it put forward last October.

    The $347.5 million mid-point in this range represents a 10 per cent decline on the $384.7 million earned during FY18.

    The news pushed shares in the travel retailer down 12 per cent, falling to $38.73 per share.

    “Our FY19 results 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,” Flight Centre managing director Graham Turner said.

    “While we expect Australian leisure results to improve as short-term operational improvement plans gain traction and as longer-term transformational strategies are implemented, we also expect these trends to continue.”

    Turner noted the business is on track to earn record profits in its US and UK businesses, with the US poised to become the second largest segment after Australia, and more than half of the group’s profit to be generated internationally for the first time.

    He also outlined Flight Centre’s strategy to counter the declining leisure market – namely a three-pronged focus on mass, premium, and youth travel.

    Additionally, an accelerated expansion into newer models outside of its traditional bricks-and-mortar offering will sit at the centre of the brand’s plans globally.

    Investing in corporate travel, such as through its recent acquisition of the Upside Travel Company, has the potential to disrupt traditional players in the large and fragmented SME market.

    “Short-term results will be below our initial expectations and there is further work to be done, but there are also some promising signs for the future,” Turner said.

    “Out strong growth trajectory in both corporate and global travel is evident and we are implementing solid plans to address issues in the Australian leisure business in both the near and longer term.”

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  • Flight Centre Looking at Corporate Travellers

    Flight Centre Looking at Corporate Travellers

    Travel retailer Flight Centre has made a 25 per cent investment in The Upside Travel Company, strengthening its presence in the global corporate travel sector.

    Flight Centre, which is now the business’s largest shareholder, will gain access to its technology platform and software development resources, enabling it to fast track growth in the small-to-medium sized corporate sector.

    “Upside is an emerging corporate travel business with an innovative customer offering that has the potential to disrupt traditional offerings in the SME sector in the future,” Graham Turner, Flight Centre’s managing director, said.

    Turner said the business is taking steps to future proof its SME offerings, which it predominantly provides through its Corporate Traveller brand, while also creating a blended on and offline offering for customers.

    Dean Smith, president of Flight Centre’s operations in the Americas, said the company planned to utilise Upside’s technology platform to grow Corporate Traveller’s digital offering.

    “We’ve been impressed by the capability and flexibility of Upside’s technology and team to improve the business traveller experience,” Smith said.

    For Upside, the deal will significant improve the business’s reach by giving it access to Flight Centre’s supplier relationships and global business.

    “Flight Centre is the perfect partner for Upside as we get aggressive in serving small corporate clients,” Jay Walker, CEO of Upside, said.

    “Not only does Flight Centre’s global scale, content and experience immediately make our product more complete and more credible, but its people and expertise also make us smarter, which is key as we accelerate into the future.”

    The investment is the latest in a string of such moves by Flight Centre, which recently invested in Bangkok-based 30SecondsToFly, and the acquisition of travel companion app Sam.

    The enhanced Corporate Traveller option will initially only be available in the Americas, but will be pushed to the United Kingdom in the “medium-term”.

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  • Flight Centre recently slapped with $12.5 million fine

    Flight Centre recently slapped with $12.5 million fine

    Flight Centre has been slapped with a $12.5 million dollar fine for attempting to fix pricing with international airlines between 2005 and 2009.

    The Full Federal Court of Australia handed down the penalty on Wednesday morning, following a successful high court appeal by the ACCC against an earlier court decision in 2016.

    The decision is the latest turning point in a six-year between the competition watchdog and Flight Centre, which has the travel agent lose an initial court case before winning an appeal and then subsequently losing another ACCC appeal to the High Court.

    The ACCC alleged that Flight Centre sought to enter into price fixing arrangements with three airlines where they would agree not to offer airfares on their own website that were cheaper than those offered by Flight Centre.

    Flight Centre is now considering whether there are legal grounds to seek leave for another appeal against today’s judgement.

    “This was a complex test case as evidenced by the contrasting judgements during the past six years,” Flight Centre managing director Graham Turner said in an ASX release on Wednesday.

    “Flight Centre at all relevant times believed that it was acting lawfully and that its conduct did not contravene the Trade Practices Act, given that its interactions took place within the context of commercial negotiations as to agency arrangements with its principals.”

    Flight Centre said the fine would not impact its FY18 market guidance of an underlying profit before tax of between $360 million and $385 million.

    Flight Centre was initially fined $11 million but after it won its initial appeal a refund was issued.

    Today’s $12.5 million fine was higher than the original penalty, which ACCC chairman Rod Sims said reflected the size of Flight Centre.

    “The ACCC appealed from the initial $11m penalty orders because it considered that this level of penalty was inadequate to achieve a strong deterrence message for Flight Centre and other businesses,” Rod Sims said in a statement on Wednesday.

    “We will continue to argue for stronger penalties which we consider better reflect the size of the company, as well as the economic impact and seriousness of the conduct. Significant, large penalties act also as a general deterrent to other businesses that may be considering such conduct themselves.”

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  • Flight Centre buys two New Zealand firms

    Flight Centre buys two New Zealand firms

    ASX-listed Flight Centre Travel Group bought two local travel firms for a combined A$19.5 million as it seeks to expand its footprint in New Zealand, making it one of the country’s biggest travel management groups.

    In its annual earnings published to the ASX on Thursday morning, the Brisbane-based company said it has agreed to buy Travel Managers Group (TMG) for an initial A$8.37m and Executive Travel Group (ETG) for an initial A$11.17m, each with working capital adjustments to be made.

    TMG provides systems and support to a network of 180 travel brokers and operates a 22-shop franchise network including 12 TravelSmart shops and 10 other non-branded stores, while ETG is New Zealand’s biggest independent corporate travel manager.

    The Australian travel agent’s New Zealand business generated total transaction value of A$1.1 billion in the year ended June 30, 2017, up 10 per cent from a year earlier.

    Chief operating officer Melanie Waters-Ryan said the business was “successfully executing its key global strategies which include enhancing productivity in the short-term”.

    “The company has also strengthened its presence in the home-based/independent contractor sector, a rapidly growing part of the travel industry, by recently agreeing to buy established networks in both New Zealand (Travel Managers) and Australia,” she said.

    When it announced the deals at the beginning of August, Flight Centre said the purchases made New Zealand its fifth biggest business globally.

  • Flight Centre buys two New Zealand travel firms

    Flight Centre buys two New Zealand travel firms

    ASX-listed Flight Centre Travel Group will buy two local travel firms for an undisclosed sum, expanding its footprint in New Zealand and making it one of the country’s biggest travel management groups.

    The Brisbane-based company on Monday said it had agreed to buy Travel Managers Group (TMG) and Executive Travel Group (ETG), without providing details of the transactions, making New Zealand the Australian firm’s fifth biggest business globally.

    The two businesses will add $3 million of annual earnings before interest, tax, depreciation and amortisation, and Flight Centre said their addition will boost the New Zealand business to almost $1.5 billion in annual sales in the 2018 financial year.

    “ETG will enhance our already strong corporate travel offering in New Zealand and will give the business additional scale and expertise,” Flight Centre managing director Graham Turner said in a statement to the ASX.

    TMG provides systems and support to a network of 180 travel brokers and operates a 22-shop franchise network including 12 TravelSmart shops and 10 other non-branded stores, while ETG is New Zealand’s biggest independent corporate travel manager.

    Former Flight Centre staffer Kevin Weston co-owns ETG, which was set up in 1978 and he and business partner Nicola Jamieson bought a 40 per cent stake in TMG in 2014.

    Weston, Jamieson and TMG shareholder David Wallace will keep running the two businesses, and report to Flight Centre New Zealand managing director David Coombes.

    Flight Centre will use company cash to pay for the acquisitions, which are expected to settle in the first quarter of the 2018 financial year. No price was disclosed, although Flight Centre said they were in line with normal multiples. The ETG purchase includes extra payments if certain earnings targets are met.

    The ASX-listed company’s shares last traded at $A43.50 ($NZ46.33) and have jumped 39 per cent so far this year.

  • Flight Centre India to double network

    Flight Centre India to double network

    Australian travel retailer Flight Centre expects to more than double its network and business in India over the next five years.

    Flight Centre, listed on the Australian Stock Exchange, debuted in India 10 years ago and now considers the nation one of its top five corporate business markets globally.

    “India is an emerging market and a long term business for us,” said Rob Flint, executive GM – Asia and global corporate told the Economic Times.

    “We are expecting a high double digit growth from this market over  the next five years.”

    Flight Centre currently operates a corporate travel arm FCm Travel Solutions along with leisure travel company Flight Shop in India. The company currently has 12 operational stores in the country and plans to open 10 more next year.

    “We currently do about Rs 200 million (US$3 million) of business in India and believe that to be a leader in our space in India, we need to do at least Rs 500 million of business. We want to get to that level in the next five years,” added Rakshit Desai, MD India, FCm Travel Solutions and Flight Shop.

    Consumer travel accounts for about half the company’s turnover currently but it sees the corporate market as its main growth driver. The entire Flight Centre India operations posted profit growth of 12 per cent this year against last.

    The company entered India by buying New Delhi-based travel agency Friends Globe.