The irritants that could hinder Flight Centre’s resurgence

afr.com:

Flight Centre chief executive Graham “Skroo” Turner was nursing the after-effects of a cold last week at the global travel agency’s annual general meeting.

It was a “Paris cough”, the 74-year-old joked, when his meeting address was interrupted by a croup. The bug was something Mr Turner picked up while meeting suppliers at the Rugby World Cup in Paris, as part of a business trip to Europe including celebrating a 50-year-old bus tour venture.

Graham Turner at a London party to celebrate the 50th anniversary of starting the bus tours venture Top Deck.  Hans van Leeuwen

The meeting delivered an upbeat assessment of Flight Centre’s trading: transactions handled in the first quarter represented the second-strongest start to any year, it said.

And full-year underlying pre-tax profit is forecast to land between $270 million and $310 million for this financial year, within market expectations. (Those numbers will exclude the costs of a staff retention plan launched during the pandemic.)

Analysts seem largely optimistic following the update, citing bullish factors including improving revenue margins and Flight Centre emerging from the pandemic with better productivity.

But, like the Paris cough, some irritants also lurk. The squeezed seat availability on some airlines is crimping growth, and there are questions over whether a newly acquired luxury travel business has been tested in a downturn.

Flight Centre started in 1982 with stores in Brisbane, Sydney and Melbourne. Turner, a trained veterinarian, co-founded the business after running bus tours during an earlier stint in Britain.

Recovery mode

From almost 20,200 staff in 2019, Flight Centre now has 12,200 employees. It raised $700 million at a discounted price of $7.20 a share