Flight Centre targets high-end customers

Flight Centre targets high-end customers

Flight Centre has set profit and sales records for the first half of the 2013 reporting year, as it looks to increase its focus on corporate and premium customers and further integrate its online and in-store businesses.

The travel company reported a net profit of $91.8 million for the six months to December, a 13 per cent increase from the previous corresponding period, despite consumer and business confidence headwinds.

The firm declared a fully franked interim dividend of 46 cents per share.

Shares were down 3.1 per cent to $31.28 in late afternoon trade.

Shaw Stockbroking analyst Darren Vincent said the Flight Centre results were in line with expectations, adding that the slight dip in the company’s share price today was in part a reflection of the market’s nervousness about the Italian elections, and a slight inherent volatility in the stock’s value.

‘‘There are no secrets there that either Flight Centre or the travel industry has as to the way the outlook is. We’re staying bullish,’’ Mr Vincent said.


The firm said its growth outlook for the 2012-13 financial year was marginally ahead of targets, and it would continue to aim for profit before tax of $305 million to $315 million, with the largest profit months ahead.

‘‘Australia and the UK are now entrenched as the company’s largest and second largest profit generators and again delivered record [earnings before interest, taxes, depreciation, and amortisation] in challenging trading conditions to underpin [Flight Centre’s] overall growth,’’ Flight Centre’s managing director Graham Turner said.

‘‘Our Singapore and Greater China businesses also contributed record first half EBIT, which helped [Flight Centre] comfortably surpass the profit milestone that was established last year.

‘‘In addition, a first half sales record was established. While some leisure businesses grew strongly, including Australia’s niche brands, corporate growth was generally stronger.’’

The company also recorded EBIT of $124.8 million for the first-half of the 2012-13 financial year, up 11 per cent from the same period the year before.

Its online portal, flightcentre.com.au, reported a growth of 23 per cent in sales and was on track to reach $5 million EBIT.

Legal costs from Australian Competition and Consumer Commission (ACCC) action against the company over alleged price fixing amounted to $1.7 million for the first six months of the reporting year, chief financial officer Andrew Flannery said in an investor's briefing today.

Looking ahead, Flight Centre said it would focus on growing its corporate sector and fully implementing its ‘‘blended model’’ - which would allow customers to seamlessly move between shopping for flights and travel packages online and in-store.

Mr Turner said more of Flight Centre’s marketing would focus to on premium rather than low-cost flights.

"The overall move from economy to business, particularly in leisure, is going to be a positive move for us and the travel industry, as well as airlines generally," he said.

Mr Turner added that airline ticket prices were at an all-time low and were likely to rise.

"As well as people moving more into premium fares, I think that the fares will tend to move up. ... I think there will be some inflation of fares generally and I think that the move to more premium fares will help our [total transaction value] growth."

Shaw's Mr Vincent said that the outlook for the company was expected to remain stable, with consumer sentiment unlikely to weaken further and little challenge from online travel packages at this time.

Demand for flights would also continue as a result of a structured shift in flying, which has seen more Australians become used to taking to the air regularly, he said.

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