FLIGHT CENTRE PROFITS TAKE OFF

Written on the 2 March 2011

FLIGHT CENTRE PROFITS TAKE OFF

FLIGHT Centre has bucked the downward tourism trend after today reporting NPAT of $70.5 million – up 38 per cent on half-yearly FY10 figures of $51.1m.

Managing director Graham Turner (pictured) says the Australian component of the business remains the most lucrative.

“Most of our profit continues to come from Australia and from our retail business, although our global corporate operations also started the year well,” says Turner.

“And despite the state of the UK economy, our operations there have been performing strongly for the past couple of years.”

Turner insists the company’s online presence doesn’t threaten its retail operation.

“About 85 per cent of international travel is booked through agents, plus a significant chunk of domestic – so there’s certainly a place for agents,” he says.

“Consider that Flight Centre generates around $7 billion in sales per year, just in Australia, and only a small percentage of that is generated through our website. So almost that entire figure is generated via shops.”

There has been movement in the leisure travel part of the business, which suffered a moderate downturn, offset by strong corporate travel results.

“Following our strong second half performance last year in leisure travel, we have experienced a moderate slowdown in the sector during the early months of 2010/2011,” says Turner.

“This has been offset by strong corporate travel results, with all corporate businesses profitable at EBIT level during the first quarter. The only exception was the emerging Singapore FCm business, which generated a small loss.”

In a further example of the company’s bullish acquisition drive, FLT became one of the United State’s largest corporate travel providers after taking full ownership of Boston-based Garber’s Travel Services Incorporated in December last year. The acquisition cost  $US10.4m, including $US6m in cash, for the 74 per cent it didn’t already own.

“In the US, we have a comprehensive and profitable corporate offering that includes FCm offices in Seattle, San Francisco, Los Angeles, Phoenix, Dallas, Chicago, Boston, New York and Washington DC,” says Turner.

Flight Centre shares remain steady, trading at around $23.00.

For the full interview with Graham Turner and Flight Centre, don’t miss Brisbane Business News’ annual Top 50 Companies edition out in March.


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