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    FLT   AU000000FLT9


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General Announcement::ASX:FLT 2021 Managing Director's AGM Address

10/19/2021 | 08:01pm EST

Managing Director's AGM Address

Thanks Gary.

As you have heard, FY21 was another tough year for travel, but conditions have gradually started to improve.

Indeed, we start the second quarter of FY22 with a fair degree of optimism given the regular travel restriction relaxations we are now seeing globally.

Some very important routes are now open or expected to reopen in the coming weeks, while travel is finally poised to take-off again in Australia. This Australian outbound reopening, which was flagged a couple of weeks ago, has prompted a surge in leisure enquiry for most key locations, but particularly the UK, Europe, the Americas and Fiji.

Before outlining our plans and prospects for FY22, I'd like to reflect briefly on the past year- and-a-half or so.

As an organisation, our priorities have evolved during the pandemic from emergency cost cutting during the FY20 fourth quarter to maintenance of those significantly reduced operational expenses while investing in our brands, developing and implementing our technology, improving productivity and finetuning our recovery strategies.

We remain very focussed on improving returns in the short-term, but also continue to build for the future while others are hibernating or unable to invest significantly in their offerings.

This balance allows us to capitalise on opportunities now, as demand starts to recover, and in the future, as we target a return to pre-COVID sales volumes.

When lockdowns are lifted and borders re-open, we see that travel bounces back immediately and strongly. South Africa is a great example, as is Queensland following Monday's announcement, and I will talk a little bit more about what we're seeing shortly.

As you will know, FLT has three main travel divisions - Leisure, Corporate and Supply.

Flight Centre Travel Group Limited ABN 25 003 377 188

275 Grey Street, South Brisbane QLD 4101 AUSTRALIA

We believe this diversity is of enormous value and a great advantage to us and to our suppliers.

Also, our stable, capable, very experienced and pretty intelligent leadership team has played a major role in getting us to where we are now and will be integral to our future success.

We have learnt a lot over the last 18-20 months - the main things I think are being resilient, being consistent and being as optimistic as possible to see us through tough times. Also, using these times as an opportunity to improve and streamline our systems, our technology and our overall operations.

Most of our markets are now living with the virus, accepting it is with us for the long-term.

We are planning - as much as we can - to be back in black on a monthly basis later this financial year and back to 100% of 2019 TTV around June 2024 but with a much leaner cost base and a more efficient operating model.

Targeting a return to monthly leisure and corporate travel profitability during FY22

The exact timing of our return to profitability is uncertain and remains largely in government hands, given that revenue generation opportunities are intrinsically linked to:

  • Borders re-opening and staying open; and
  • International travel resuming in a more meaningful way globally and with fewer restrictions, which we are finally starting to see

This uncertainty means we are not currently in a position to provide FY22 profit guidance.

We initially expected that restrictions would gradually and selectively ease as countries cautiously opened back up through carefully selected travel corridors or bubbles.

On a very positive note, this has started to happen more rapidly and on a larger scale than we expected.

For example, last Friday we learned that:

  • International travel from Australia, or more specifically New South Wales, would resume from November 1; and

Flight Centre Travel Group Limited ABN 25 003 377 188

275 Grey Street, South Brisbane QLD 4101 AUSTRALIA

  • The US would welcome fully vaccinated international travellers from November 8, a move that has effectively relaunched two-wayTrans-Atlantic travel

Prior to this announcement, Americans could travel to the UK, Canada or Europe, but reciprocal rights were not available to UK, Canadian or European travellers hoping to venture the other way.

Each of these re-openings will, in time, potentially deliver material benefits to our company given that:

  • Our large Australian leisure business is very heavily weighted towards international travel - this represented more than 80% of pre-COVID TTV; and
  • The US's status as a key destination for our leisure and corporate customers globally

The US was, in fact, the largest outbound market for our UK and Canada businesses pre- COVID and the second largest outbound market for our Australian business.

At the start of this week, the Queensland Government also announced re-opening plans, sparking another strong and immediate response from travellers.

Following this announcement:

  • Our Ignite business, which operates a specialist MyQueensland division, recorded a 663% increase in page views above the average; and
  • flightcentre.com.au recorded its largest day of online sales since June 2021, when Australian borders were open, with inbound Queensland bookings doubling compared to the previous week

As we have indicated previously, we need to generate some 50% of our traditional TTV in corporate and circa 40% in leisure to reach breakeven within each of these divisions.

This is based on current cost bases, which means the breakeven percentages will increase if we choose to invest further in key growth drivers like people, marketing, sales channels or technology to generate stronger future returns.

While returning to profitability is very important to us in the short-term, winning and retaining customers - which will be reflected in TTV - is paramount for the longer term and will be a key focus initially.

Flight Centre Travel Group Limited ABN 25 003 377 188

275 Grey Street, South Brisbane QLD 4101 AUSTRALIA

As we are already seeing, our profit recovery trajectory will not be linear, given costs will ramp up to service anticipated customer demand before we benefit from the revenue.

Expecting strong returns on pandemic-period investments

Looking within our own business, we expect to see tangible returns on our pandemic-period investments as the world reopens.

We are now a leaner and more efficient organisation, which means we are well placed to benefit as the cycle improves.

In both the corporate and leisure travel sectors, we are successfully executing our productivity strategies and achieving our operational objectives.

We have both protected our assets and continued to invest in our key growth drivers, including our famous brands, during an immensely challenging period that has led to some market consolidation, particularly in the corporate sector.

Travel will inevitably be more complex in the post-COVID world and customers will require more assistance from our expert travel advisors as they navigate new requirements and seek to understand any restrictions that may still apply. Within this environment, our people's knowledge and our enhanced systems will prove invaluable at every step of the customer journey, as we are already seeing in the corporate sector.

In leisure, recent research by the US's Family Travel Association and the NYU School of Professional Studies has highlighted the increasingly important role that travel advisors are likely to play post-COVID.

According to the research, which was included in the U.S Family Travel Survey 2021, 65 per cent of respondents said they would consider using a travel advisor over the next two years, compared to just 17 per cent who had used a travel advisor over the previous two years.

As Gary mentioned, our brand and geographic diversity is another strength and it has helped shield our company from some of the challenges others have faced, while also potentially fast-tracking our recovery given our earnings leverage to countries and regions that are starting to exhibit strong recovery trajectories.

Flight Centre Travel Group Limited ABN 25 003 377 188

275 Grey Street, South Brisbane QLD 4101 AUSTRALIA

For example, about 55% of our pre-COVID earnings came from the Americas and EMEA - regions that have well-advanced vaccination programs, few restrictions in place and solid sales momentum.

The Americas and EMEA also stand to benefit significantly from the large pipeline of corporate accounts won during FY21 (circa $US1.4billion), with some 70% of this new business set to trade in these two regions.

In addition, there is very significant potential upside in heavily restricted markets like Australia and New Zealand, which are particularly important to our leisure division.

Travel industry poised for rapid take-off as more favourable market conditions emerge

Several lead indicators point to the possibility of a fairly rapid travel industry take-off in the coming months.

Firstly, vaccination programs are gaining significant momentum.

According to ourworldindata, by the start of this week almost half of the world's population had received at least one dose of a COVID-19 vaccine.

In most of our countries, numbers now exceed 65%.

Secondly, travel restrictions are now rapidly being relaxed or removed, as highlighted earlier.

Thirdly, consumers are ready to travel, with confidence recovering in most markets, savings at or near all-time highs and significant pent-up demand evident.

Fourthly, suppliers are looking to resume services as quickly as they are allowed to and are generally keen to work closely with us to fast-track the recovery.

In Australia, we believe a number of airlines including Singapore Airlines, Fiji Airways and Qantas, will be back to pre-COVID capacity early in the new year once caps are lifted.

In terms of pricing, we expect airfares will also return to close to pre-COVID levels in the new calendar year as we move out of peak season and capacity and load factors start to normalise.

FY22 Trading Update

Much has changed during the eight weeks since we released our FY21 accounts.

Flight Centre Travel Group Limited ABN 25 003 377 188

275 Grey Street, South Brisbane QLD 4101 AUSTRALIA

This is an excerpt of the original content. To continue reading it, access the original document here.


Flight Centre Travel Group Ltd. published this content on 20 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 October 2021 00:00:02 UTC.

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Sales 2022 1 107 M 775 M 775 M
Net income 2022 -148 M -103 M -103 M
Net cash 2022 365 M 255 M 255 M
P/E ratio 2022 -23,7x
Yield 2022 0,06%
Capitalization 3 459 M 2 428 M 2 422 M
EV / Sales 2022 2,80x
EV / Sales 2023 1,58x
Nbr of Employees 8 947
Free-Float 76,9%
Duration : Period :
Flight Centre Travel Group Limited Technical Analysis Chart | FLT | AU000000FLT9 | MarketScreener
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 15
Last Close Price 17,33 AUD
Average target price 19,19 AUD
Spread / Average Target 10,7%
EPS Revisions
Managers and Directors
Graham Francis Turner Chief Executive Officer, MD & Executive Director
Adam McGregor Campbell Chief Financial Officer
Gary Warwick Smith Independent Non-Executive Chairman
John Anthony Eales Independent Non-Executive Director
Robert A. Baker Independent Non-Executive Director
Sector and Competitors