The Flight Centre Travel Group (FLT) is reporting that its recovery is gaining momentum, with travel demand escalating globally during the fourth quarter (Q4) of the 2021 fiscal year (FY21).
It notes that the recovery was particularly strong in the US – the leisure and wholesale businesses returned to profit late in the year – and in the corporate sector, with total transaction value (TTV) globally rebounding to 40% of PC levels by June 30, 2021.
Corporate transaction volumes (ticket numbers) were typically higher than TTV, reflecting heavier than normal domestic travel weighting.
Volumes were at 80% or more of PC levels in China, France and Germany by the end of July 2021 and were approaching 70% in the US, as FLT continued to gain market-share globally.
Corporate TTV and ticket volumes are expected to recover further in FY22, given that FLT has established solid foundations for continued organic growth by:
- Securing accounts with PC annual spends in the order of $US1.4billion during FY21 to strengthen and further diversify its global customer base. Recent wins include flagship accounts such as Procter & Gamble (won out of the US and Europe) and Britain’s Foreign & Commonwealth Office, which the FCM network will service from 44 countries
- Retaining almost 100% of large market or enterprise (FCM) customers
- Investing significantly in its customer offerings during the pandemic, with game-changing new platforms for both FCM and Corporate Traveller set to launch during the FY22 first half (1H)
And while ongoing lockdowns throughout Australia are currently impacting near-term bookings, trading conditions and the travel outlook are generally improving, with vaccination programs gaining momentum worldwide and restrictions being removed or relaxed in several key markets, which is leading to strong and immediate spikes in demand.
In addition, FLT expects to benefit from its ongoing investments in its platforms, products and people to fast-track market-share growth and gain further competitive advantage as recovery continues.
These investments, which include the two new FCM and Corporate Traveller platforms, underpin the corporate businesses’ “grow to win” strategy, which is being successfully executed globally.”
Similarly. the leisure business is achieving its strategic objectives with structural changes now complete, the business positioned for recovery and solid early progress as evidenced by:
- Improved overall market-share in Australia through an enhanced range of sales channels
- Increased online sales as a percentage of overall sales and new deals in place with Google Flights and Amazon
- The restructured US business back in profit at various times during the 2H and capturing 45% of PC TTV in July 2021 through 16% of its traditional Liberty Travel sales force and other enhanced sales channels
- Various other leisure and corporate businesses have returned to modest profit or approached breakeven in specific months during the 2H.
Group-wide, FLT continues to target a return to monthly corporate and leisure profitability during FY22, subject to vaccinations continuing to prove effective against all COVID strains, domestic borders reopening and staying open and further international travel resumptions.
While there is not yet a definitive timeframe for travel restrictions to be lifted in Australia and New Zealand, the company now has heavier earnings leverage towards other regions with more positive short-term outlooks given 54% of PC underlying PBT was generated in the Americas & EMEA. In addition, some 70% of the FY21 corporate account wins should trade in the Americas and EMEA – fuelling further organic growth within these two key regions during FY22 and beyond.
Graham Turner, FLT CEO, observed that: “FY21 was another challenging year for our industry, but conditions have gradually started to improve. When lockdowns have lifted and borders have re-opened – as they have just started to do in a more meaningful way outside of Australia and New Zealand – we have typically seen immediate and strong travel recovery, which is what we have now started to see in key locations like the US, Canada and Europe.”
Turner continued: “The near-term outlook has also improved in the UK, another large and important market for our company, with most restrictions now lifted and people learning to live with the virus.”
He pointed out that: “As an organization, we too have learnt a lot during the past 18 months, particularly about being resilient, consistent and as optimistic as possible during tough times. Our priorities have evolved from emergency cost cutting at the beginning of the crisis to maintaining those significantly reduced expenses, while still developing and implementing our technology, improving productivity and finetuning our recovery strategies to drive stronger future returns.”
Turner said that: “Looking ahead, we believe our position as a diversified global business with compelling customer offerings across three main travel divisions – leisure, corporate and supply – will be of enormous value and a great advantage to us and to our major suppliers. Although we can’t predict the future, given the current government-enforced restrictions, we are targeting a return to monthly profitability later in FY22 and to return to pre-COVID TTV by June 2024, but with significantly reduced ongoing operating costs.”
And he concluded: “Travel will inevitably be more complex in the post-COVID world and customers will require more assistance as they navigate new requirements and try to understand any restrictions that may still apply. In this type of environment, our people’s knowledge and our enhanced systems will prove invaluable at every step of the customer journey.”