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Resilient travel demand propels Flight Centre earnings

Flight Centre head Graham Turner says spending on travel is strong, despite living pressures.

Flight Centre head Graham Turner says spending on travel is strong, despite living pressures. Photo: AAP

The rising cost of living has failed to dampen Australian consumers’ enthusiasm for travel, with strong ongoing demand lifting sales at Flight Centre.

The travel retailer on Wednesday announced a 15 per cent jump in total transaction value – the price of travel services and products plus revenue – for the first half of the 2023/24 financial year to $11.3 billion.

Despite household budgets constricting across the economy, travel was outpacing other discretionary spending items, managing director Graham Turner said.

“At a time when discretionary budgets are typically tightening, travel remains an outlier and a priority spend for many,” he said in a statement.

Solid ongoing demand across leisure and corporate bookings and margin improvements were leading to stronger profits and shareholder value compared to pre-COVID, he said.

The group’s profit margin before tax of 0.94 per cent was the best first-half result in five years, helping propel underlying profit before tax to $106 million after recording a narrow loss in the prior corresponding period.

Its net bottom line result was a profit of $86.6 million, versus a loss of $19.8 million in the previous corresponding period.

Shareholders were treated to a 10c interim dividend, as part of a $425 million investment in capital management initiatives intended to reduce future dilution, interest expense and shareholder returns.

Flight Centre enjoyed a strong start to the second half, with total transaction value for the year on track to exceed the company’s record $23.7 billion result in 2018/19, Turner said.

“Positive lead indicators have also emerged, with international capacity expected to be back to almost pre-pandemic levels in Australia by the end of financial year 2024 and airfare prices decreasing – by an average of 13 per cent in Australia recently and about seven per cent globally over the first half,” he said.

– AAP

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