FLIGHT CENTRE UPGRADES PROFIT

Written on the 16 February 2010

FLIGHT CENTRE UPGRADES PROFIT

FLIGHT Centre Limited (FLT) shares surged 7.3 per cent today as the Brisbane-based travel agent lifted its profit expectations by at least $25 million for the 09/10 fiscal year.

The company initially flagged a $125 million to $135 million pre-tax profit, but that band now has increased to between $160 million and $180 million.

Managing director Graham Turner (pictured) attributed the revised guidance to good growth in sales volumes, lower average ticket yields, as well as profits in the UK, Canada, South Africa and New Zealand.

“Assuming global trading conditions continue to gradually recover, we are well placed to record stronger profit growth during the second half, as results during the corresponding period of 2008/09 were heavily affected by the global financial crisis,” says Turner.

The new profit expectations will mean 60 per cent to 80 per cent profit growth on the 08/09 result of $99.8 million.

“Double-digit growth is a reasonable achievement for the first half, given that last year’s result included a record first quarter profit,” says Turner.

“Our wholesale operations, in particular the direct contracting model we have been working on for the past three years, have also performed well and have helped deliver solid margins over the past six months.

“Our efforts to maintain margins in the future will also be assisted by a new five-year agreement that has just been signed with our global distribution system provider Galileo.”

FLT still expects $6.5 million in losses from its US-based businesses Liberty and FCm Solutions, as well as $2.3 million in interest expense and another $2.3 million in one-off costs.

The company is also in negotiations to boost it’s ownership of FCm India from 56 per cent to 100 per cent, following previous disputes with joint venture partner Rahul Nath.

FLT will release its half year results on February 25.

FLT shares closed at $19 today.


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