Flight Center lifts forecasts as forex shops revive

The return has been bumpy partly because of the emergence of coronavirus variants.

Flight Center said travel demand had accelerated partly after concerns about the omicron strain of COVID-19 lessened. Another factor was governments having “globally relaxed or removed the restrictions that had grounded most non-essential travel since the start of the pandemic”.

Chief executive Graham Turner said Flight Center broke even on an EBITDA basis in the past six months.

“We certainly would presume that will continue to improve over the next six and 12 months,” he told The Australian Financial Review.

The upgrade and any further improvement would help alleviate pressure on Flight Centre’s balance sheet and cash burn, said QValue analyst Daniel Seeney.

He added that coronavirus variants also remained a potential risk to recovery of markets – particularly the lucrative long-haul leisure sector. That market can include Baby Boomers, a more at-risk population.

“It’s more about the impact that [variants] has on sentiment, ”Mr Seeney said.

Mr Turner said Flight Centre’s corporate travel agency business, whose brands include FCM, was gaining market share and had won contracts including energy giant Shell.

He added that Travel Money, its low-margin foreign exchange business operating in Australian, was again profitable.

“We opened up half a dozen fairly early on. We were absolutely amazed at the response. So, we’ve just been opening them back up as quickly as we can, ”Mr Turner said.

Customers wanted cash, especially for nations where local currency use was predominant, and cash cards, he said.

“One of the things, of course, is there’s not a lot of competition now. The banks don’t do a lot of this, which they did before, ”he said.

“Mainly because I think people didn’t think it would come back as strongly with the widespread use of credit cards.”

Mr Turner said the number of flights remained a problem in the Australian market. “The demand is there but we need more capacity,” he said.

Like other sectors, Mr Turner said Flight Center, which made massive layoffs when the pandemic started in 2020, still needed more staff. It globally has between 11,000 and 12,000 staff and would likely need another 2000 to 3000 globally, he estimated.

The company is still angering some customers awaiting refunds, including those who used its online brands such as Aunt Betty.

Mr Turner said some delays related to problems with credits from collapsed airlines but conceded customer service for online businesses had suffered as “we just haven’t had enough people on it”.

“These are all getting resolved and it will just take a bit of time,” he said.

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