Australians prioritising short-haul travel has impacted Flight Centre profits but optimism persists that rebounding interest in Asia and the US is just around the corner.
The 2024/25 financial year may have been disappointing, with the online travel agency posting a less than expected $289.1 million before-tax profit, but early results have executives and analysts confident of greener grass ahead.
“Our fundamentals remain strong – arguably stronger than ever – and we expect to return to profit growth this year,” managing director and company founder Graham Turner said at the company’s annual general meeting on Wednesday.
With the largest share of business taking place between March and June each year, fears of US border turnbacks and rising tensions in the Middle East in the first half of 2025 had a big impact on Flight Centre’s success.
Australians in particular started to look for shorter international flights with Japan overtaking the US and UK to become the second-most popular overseas destination behind New Zealand.
But analysts are seeing signs travellers are returning stateside as October outbound travel to the US from Australia grew for the first time since the March quarter.
“With the stock an under-performer relative to travel peers we expect today’s update to be taken positively,” RBC Capital Markets analyst Wei-Weng Chen said.
Corporate clients are of ever-increasing importance to Flight Centre and losses in Asia were a significant contributor to the lacklustre profit showing in 2024-25.
In the first quarter of the current financial year, Mr Turner reported Asia was providing “modest profitability” and the total transaction value of corporate business rose seven per cent.
The sunnier outlook led to target profit before tax between $305 million and $340 million in the next earnings report, a rise of up to 17 per cent.
Embracing artificial intelligence is a step the travel company is approaching cautiously, noting both its potential to streamline customer service but also the threat of AI-powered competitors in travel planning online.
Corporate Traveller, a subsidiary of Flight Centre, has introduced an AI assistant called “Mel” to “deliver a smarter, more personalised experience -while keeping human service at the core”.
When questioned by a shareholder what the adoption of AI would mean for the future of the 12,400 full-time employees of Flight Centre, the company’s chief financial officer said AI was not intended to replace staff.
“We are very much a people-oriented company,” Adam Campbell said.
“We will always be a people-first organisation, but we will use AI as an enabler of our strategies.”
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