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Flight Centre reports on first half
Flight Centre Chief Executive Graham Turner says he expects a strong second half and hopes to deliver a similar profit result to last year.
The travel group posted a first half net profit of $33.60 million, down 7.7 per cent on the same period last year.
Sales continued to grow, with total transaction value up 14% to $3.7 billion.
“With the improvements we have started to make, the strategies that have been implemented and the slight momentum we have gained during the second quarter, we would be disappointed if we did not get reasonably close to last year’s pre-tax result of $115.6 million,” he said.
The result included a one-off $4 million gain which was more than offset by $10 million in costs related to the ill fated Flight Rewards customer loyalty program, a $1.8 million loss related to the collapse of Indonesian airline Air Paradise and higher airline fuel surcharges and levies.
Flight Rewards was disbanded in January but Flight Centre said it would incur additional costs of $5 million in the second half.
Profit results in New Zealand were below expectations, although sales were good.
“Australian profit was also adversely affected by airline policies of applying additional fuel surcharges to fares, rather than incorporating fuel and other legitimate operating costs in overall ticket prices,” Mr Turner said.
“This confuses travellers by obscuring true airfare costs and also affects Flight Centre’s earnings and income margin, as some airlines have not paid commission on this surcharge.”
“While we believe we have started to turn the corner, we still have a long way to go before we are confident we have returned to solid growth,” Mr Turner said.
“Hopefully these results show the steps we have taken over the past 18 months have started to gain some traction.”
“While there are many challenges, the outlook for international travel generally is bright and competition is healthy on most of the key routes out of Australia,” Mr Turner said.
Oppiortunities identified for 2006 included
- continued expansion of the Infinity Holdays wholesale business
- international expansion of the FCm Travel Solutions network
- expansion in the emerging Chinese and Indian markets
- growth in internet bookings margin
Graham Muldoon
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