The Flight Centre (ASX:FLT) share price is soaring after AGM

Shares in Flight Centre Travel Group Ltd (ASX: FLT) took flight in early trade today after the travel company’s annual general meeting (AGM). The share price went up more than 5% after management conveyed its beaten-down results from FY20 and the strategy going forward.

Highlights from today’s AGM

• In FY20, the company has delivered an underlying loss before tax of $510 million before one-off items, including COVID-19 induced expenses of $339 million. On a statutory basis, Flight Centre delivered a loss of $849 million before tax
• Management highlighted its swift action to stabilise the ship by cutting costs – which has resulted in a very lean cost base – one that could ensure breakeven at 40% of pre-COVID total transaction volume (TTV) 
• $1 billion of available liquidity, due to the $700 million injected by shareholders in April and May
• Management highlighted that before February when the pandemic hit, the company was doing great with underlying profit before tax in the order of $150 million
• Company to focus on the corporate travel unit as it is more profitable than the leisure unit due to its structurally lower cost base
• No guidance will be provided for FY21 due to uncertainty

Strategy going forward

Although the outlook is very much uncertain for the travel industry, Flight Centre will focus on its corporate travel unit as it believes that segment will recover first, ahead of the leisure unit. 

With the cost base slashed significantly, the company says it should be able weather the storm until conditions improve. It will also be able to focus on its strategic investments including Ignite (now 100% owned) and tech businesses TP Connects and WhereTo.

The company also noted that the JobKeeper program it received in Australia and similar schemes in other countries had provided much-needed financial support. In Australia and Canada, these support programs now extend through to the 2021 calendar year. The company said it was likely that further extensions would be required to support struggling travel, aviation and tourism sector businesses and to save jobs.

How the Flight Centre share price has done this year

Although the Flight Centre share price has partially recovered from its lows in March, it has taken a beating this year and is down by 65% YTD.  The share price is currently trading at $13.48 up 4.25%. Its market cap stands at $2.6 billion.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Travel shares are flying higher today. Here’s why.
• Zip and Credit Clear were among the most traded shares on the ASX last week
• These are the 10 most shorted shares on the ASX
• These were the worst performing shares on the ASX 200 in October

Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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