Why did the Flight Centre share price underperform the ASX 200 in July?

A woman looks nervous and uncertain holding a hand to her chin while looking at a paper cut out of a plane that she's holding in her other hand. representing the falling Air New Zealand share price todayA woman looks nervous and uncertain holding a hand to her chin while looking at a paper cut out of a plane that she's holding in her other hand. representing the falling Air New Zealand share price today

July saw the broader market partially rebound after a rough few months, but one S&P/ASX 200 Index (ASX: XJO) wasn’t involved in the upwards action. The Flight Centre Travel Group Ltd (ASX: FLT) share price traded relatively flat despite the index’s exuberance.

The stock’s weak trade also came despite the company posting exciting news of its full year earnings, set to be released on 25 August.

After closing June at $17.36, the Flight Centre share price was trading ever so slightly lower at $17.22 come the end of July. That represents a 0.8% fall over the course of last month.

Meanwhile, the ASX 200 surged 5.74% higher to recover most of its June losses.

So, what might have weighed the Flight Centre share price down last month? Let’s take a look.

What weighed on the Flight Centre share price in July?

The Flight Centre share price slipped slightly last month amid plenty of kafuffle in the travel industry.

Australia dropped COVID-19 vaccine mandates for international arrivals, the July school holidays proved a hugely popular time to travel, and many called for Australia to close its border with Bali in a bid to avoid an outbreak of foot-and-mouth disease.

On top of that, the surging spread of COVID-19 and influenza saw chaos erupt at airports. At one point, Qantas Airways Limited (ASX: QAN) cancelled or delayed 15% of domestic flights for more than an hour.

But there was some major positive news from Flight Centre in July.

The company upgraded its guidance for financial year 2022 by around 12%. It now expects to post an underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) loss of $180 million to $190 million. That would see it breaking even on an EBITDA basis in the second half.

The company’s short position also improved last month. It fell from 16.17% at the end of June to 15.15% on 29 July – the latest data available.

Sadly, that still leaves the stock wearing the crown of short sellers’ favourite ASX share.

The post Why did the Flight Centre share price underperform the ASX 200 in July? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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.

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