The Flight Centre (ASX:FLT) share price just surged to a 3-month high. Here’s why

The Flight Centre Travel Group Ltd (ASX: FLT) share price hit a 3-month high after reaching $21.27 today.

Unfortunately, its fresh new high was short-lived as the travel agent’s shares have since given back their gains.

The Flight Centre share price finished the session today at $20.69, down 1.48%.

Flight Centre shares rocket on reopening of tourism industry

With the reopening of the Australian international border for fully-vaccinated tourists on 21 February, the Flight Centre share price has soared.

The announcement made on 7 February by the Morrison Government sent Flight Centre shares 7.8% higher on the day. This was followed by another 6.71% gain on 8 February, meaning the shares climbed 15% over the two days.

While the number of COVID-19 cases is dwindling, the world is starting to move to a post-pandemic phase.

Countries such as Denmark and Sweden have completely removed COVID-19 restrictions and accepted life with the virus.

In other parts of the world like Ireland and South Africa, most travel-related restrictions have been dissolved. Flight Centre has a global travel agent network that extends throughout Australia, New Zealand, the US, Canada, India, Hong Kong, the UK, Ireland, and South Africa.

The British government has ended the mask mandate and vaccine passports. Fully vaccinated travellers are no longer required to take a test on or before arrival. This means that passengers can freely travel to the country, encouraging a resurgence in the tourism industry.

What does it all mean for Flight Centre?

The clearer visibility surrounding the resumption of travel could lead to Flight Centre achieving better financial numbers for FY22.

Late last year, the company highlighted a return in leisure and corporate profitability. Corporate transaction numbers were at 50% of pre-COVID levels, representing around 40% of Flight Centre’s total transaction value (TTV).

The business has become a much leaner and more efficient cost base model compared to pre-COVID. This is expected to translate to bumper profits in the long term.

Looking ahead, Flight Centre is scheduled to report its FY22 half-year results on 24 February.

Flight Centre share price summary

It’s been a rollercoaster 12 months for Flight Centre investors, with its share price up 40% over the period.

When looking at this time last month, the travel agent’s share price has risen by 16% due to positive investor sentiment.

In contrast, the S&P/ASX 200 Index (ASX: XJO) has shed 1.6% over the same time frame.

On valuation grounds, Flight Centre has a market capitalisation of about $4.19 billion, with approximately 199.63 million shares outstanding.

The post The Flight Centre (ASX:FLT) share price just surged to a 3-month high. Here’s why appeared first on The Motley Fool Australia.

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• These were the best performing ASX 200 shares last week
• Is the Flight Centre (ASX:FLT) share price potential recovery as big as it seems?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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