Flight Centre share price storms 5% higher on guidance upgrade

Happy family at an airport.

Happy family at an airport.

The Flight Centre Travel Group Ltd (ASX: FLT) share price is having a strong start to the week.

In morning trade, the travel agent’s shares are up over 5% to $18.05.

Why is the Flight Centre share price charging higher?

Investors have been bidding the Flight Centre share price higher this morning after the company upgraded its guidance for FY 2022.

Following a solid rebound in travel demand globally late in the financial year, the company expects to record an underlying EBITDA loss of between $180 million and $190 million in FY 2022.

This represents an 11.9% improvement on the mid-point of the company’s initial FY 2022 guidance for an underlying loss of between $195 million and $225 million. It will also be a material improvement on Flight Centre’s FY 2021 underlying EBITDA loss of $337.9 million.

Based on this, the company is expecting to breakeven on an underlying EBITDA basis for the six months to June 30. Management notes that this is a major turnaround considering the significant losses it was making through to February.

On the top line, management expects to report total transaction value (TTV) of over $10 billion, which is more than two-and-a-half times the $3.95 billion achieved in FY 2021.

Pleasingly, on a monthly basis, the company’s TTV was tracking near or above pre-COVID levels in a number of businesses by year-end. This has been fuelled by both an uplift in demand and higher than normal ticket prices linked to a lack of airline capacity, particularly on international routes.

Management commentary

Flight Centre’s managing director, Graham Turner, was pleased with the company’s turnaround. He said:

After an incredibly challenging period, we were pleased to achieve our goal of returning to monthly underlying EBITDA profitability in both the corporate and leisure sectors late in the year. The scale of our recovery exceeded our initial expectations and meant that we should now exceed our preliminary FY22 result target, with early trading results pointing to a breakeven second half result and a healthy fourth quarter profit (underlying EBITDA).

Turner acknowledges that COVID isn’t going anywhere any time and the industry will continue to face challenges from new strains. Nevertheless, he believes the company is well-placed to overcome these challenges. The managing director explained:

There will inevitably be ongoing challenges for the industry over the next six to twelve months as new strains of the virus emerge, airline capacity returns and as we rebuild staff numbers to required levels, but we feel that we are well placed to overcome these concerns given our corporate business’s continued rise and our leisure business’s ongoing strength.

In the corporate sector, we are gaining market-share globally through high customer retention rates and a multi-billion-dollar pipeline of new accounts won across our Corporate Traveller and FCM brands during the pandemic.

In the leisure sector, our success is built on having strong brands and sales channels that are resonating with customers in what is now a more complex travel environment.

The post Flight Centre share price storms 5% higher on guidance upgrade appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Motley Fool contributor James Mickleboro 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 Scott Phillips.

from The Motley Fool Australia https://ift.tt/ZbQ7F0R

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s