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Flight Centre profit takes off as prices lose altitude

Flight Centre has reported its first full-year profit since 2019 after improved market conditions.

Flight Centre has reported its first full-year profit since 2019 after improved market conditions. Photo: AAP

Flight Centre has provided a glimmer of hope to travellers dismayed by soaring airfares, predicting prices to make a descent over the coming year.

The forecast came as the travel agency on Monday delivered its first full-year profit since 2019, finally putting the turbulence of COVID-19 behind it.

Improved market conditions due to the removal of remaining travel restrictions and growth in airline capacity helped the company to a $70.5 million statutory profit for the 12 months to June 30, up from a $377.8 million loss the year before.

Underlying earnings before interest, tax, depreciation and amortisation came in at $301.6 million – a $484.8 million boost.

The result was in line with Flight Centre’s updated guidance provided in July, as was total transaction value of $22 billion – a 112 per cent jump from the year before.

“Our $485 million profit turnaround exceeded our initial expectations as our diverse global business benefited from the removal of unprecedented restrictions that were imposed on travellers for some two-and-a-half years and from the strategies that we implemented to preserve our key assets and ensure we re-emerged in a position of strength,” founder and managing director Graham Turner said.

Flight Centre continued to reopen hibernated stores and added 2,500 staff to match increasing demand, with further recruitment flagged in corporate travel.

The segment recorded a 96 per cent increase in total transaction value to a record high of $11 billion, while leisure travel increased 162 per cent to $10 billion.

The company weighed in on the federal government’s decision to block Qatar Airways from flying additional routes to Australia after lobbying by Qantas.

“(Flight Centre) strongly supports yet-to-be-approved plans by other airlines, including Qatar Airways and Turkish Airlines, to increase traffic to Australia to boost tourism and deliver cheaper airfares to travellers,” it said.

Flight Centre forecast airfare prices to start decreasing more significantly over the next 12 months as competition on international routes increases.

The company announced its first dividend since 2019, with investors set to receive 18c per share fully franked, taking total shareholder returns for the financial year to 10.8 per cent.

Flight Centre pledged to allocate 50 to 60 per cent of net profit in financial year 2024 to dividends or share buybacks, given the improvement to cash flow and cash generation.

– AAP

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