I think Aussie travel company Flight Centre Travel Group Ltd (ASX: FLT) is one to watch in early trade. The Flight Centre share price could be on the move today after the company issued a trading update highlighting strong cash flow and providing FY20 guidance.
What could move the Flight Centre share price?
The Aussie travel group reported a cash balance of $1.9 billion as at 30 June 2020 with ~$1.15 billion in liquidity.
That comes as Flight Centre looks to build a longer liquidity runway to manage the impacts of the coronavirus pandemic.
The company reported slowing COVID-19 cash burn with revenue above initial projections and costs at targeted levels.
That appears to be reflected in the company’s cash flows. Flight Centre recorded a $53 million net outflow in July in a good result for the company.
Notably, that is well below its $65 million monthly target as the group booked $17 million in monthly revenue.
Flight Centre’s outflow inclusive of the JobKeeper subsidy totalled $43 million for the month.
Flight Centre reported its corporate business was profitable in FY20 on an underlying basis. That included winning a record amount of new accounts with annual spends in the order of US$1.3 billion.
The Aussie travel group noted signs of corporate recovery in most countries while leisure travel continues to lag due to restrictions.
The Flight Centre share price is also worth keeping an eye on after the company’s latest guidance update.
The travel group expects to report an underlying FY20 loss of $475 million to $525 million. Taking into account one-off costs and writedowns, the statutory loss is anticipated to be $825 million to $875 million.
Much of these losses were incurred after March as governments imposed heavy travel restrictions to curb the spread of COVID-19.
Foolish takeaway
I think the Flight Centre share price is worth watching in early trade. Clearly, this isn’t all good news with the heavy expected losses being announced.
However, a longer liquidity runway and outperformance against cash flow targets is good news. The Flight Centre share price has fallen 70.4% lower this year to $11.69 while the S&P/ASX 200 Index (ASX: XJO) is down 8.4%.
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Motley Fool contributor Ken Hall 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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