Flight Centre has told investors about what it has planned for FY22.
The post Own Flight Centre (ASX:FLT) shares? Here’s what the company has planned for FY22 appeared first on The Motley Fool Australia. –
But the travel business also told investors about its plans for FY22, which included a targeted return to profitability.
If you didn’t catch the Flight Centre result, it said that it saw a $507.1 million underlying loss before tax in FY21, which was similar to the result in FY20 and in line with its guidance.
The underlying loss after tax improved from $378 million to $364 million. The statutory loss after tax improved from $662 million to $433 million.
Flight Centre said that operational performance has improved significantly during the pandemic.
Although the FY21 second half revenue increased by 48% compared to the FY21 first half, this growth was offset by the $41 million reduction in retained employee government subsidies, mainly relating to jobkeeper, and a $42 million increase in underlying costs.
Flight Centre experienced month on month sales revenue growth despite COVID-19 impacts, with a COVID-era record in June 2021.
Corporate total transaction value (TTV) was tracking at 30% of pre-COVID levels by the end of the financial year. It also said there was a rapid recovery in the US late in the fourth quarter for leisure and corporate.
Travel restrictions are being relaxed or removed in several key markets, although ongoing lockdowns are impacting the ANZ recovery. It noted strong and immediate rebounds after travel restrictions are lifted.
Could the FY22 plans influence the Flight Centre share price?
Flight Centre management outlined a number of observations and plans for FY22.
It said that it’s investing to win market share and gain further competitive advantages by enhancing its platforms and products to capitalise on market share opportunities.
The ASX travel share also said that it’s looking to increase its leisure market share and/or profitability in key markets through enhanced multi-channel offerings, alongside network rebalancing.
Flight Centre is targeting a return to monthly profitability in both corporate and leisure during FY22. However, this relies on vaccination efficacy (against the Delta variant and other possible strains), governments reopening domestic borders and keeping them open.
The company is also focused on the resumption of further international travel, with a potential material benefit from trans-Atlantic flights reopening.
Management said the company has earnings leverage to markets with positive short-term outlooks. Before COVID-19, 54% of its underlying segment earnings came from the Americas and EMEA (Europe, the Middle East and Africa).
However, the business is not yet in a position to provide FY22 guidance because of the lack of clarity around government timeframes for border re-openings and removal of other travel restrictions.
To reach breakeven, the company needs to generate around 50% of its pre-COVID TTV in corporate and around 40% in leisure. This is based on the company’s current level of expenditure.
Flight Centre warned it could be some years before the sector returns to pre-COVID levels.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.