Flight Centre upgrades FY22 guidance as travel recovery exceeds expectations

Flight Centre (ASX: FLT) expects to make a smaller-than-expected loss in FY22 thanks to accelerating travel demand and higher ticket prices. The company's stock rallied 5.4% as the market opened.

“The scale of our recovery exceeded our initial expectations and meant that we should now exceed our preliminary FY22 result target, with early trading results pointing to a breakeven second half result and a healthy fourth quarter profit,” said managing director Graham Turner.

Underlying FY22 earnings are now expected to land between -$180m to -$190m, an 11.9% improvement on the mid-point of the company’s initial FY22 guidance of -$195m to -$225m.

Total transaction value (TTV) for FY22 topped $10bn, which is more than two-and-a-half times the $3.95bn in FY21 but still well-below the $23.7bn in FY19. On a monthly basis, TTV was tracking near or above pre-covid levels towards financial year-end thanks to an uplift in demand and surging airfares. 

It would be interesting to see what TTV was on an inflation adjusted basis, as most airfares have increased 20-30% in the last 12-months. 

Corporate travel to lead

"... We are gaining market-share globally through high customer retention rates and a multi-billion-dollar pipeline of new accounts won across our Corporate Traveler and FCM brands during the pandemic," said Turner.

In FY21, the global corporate businesses contributed 55% of Flight Centre's TTV and have generally led the recovery in most countries.

Other recovery hints

American Express beat quarterly earnings expectations last Friday thanks to a surge in travel-related spending.

"The travel rebound in particular has been faster and stronger than anyone expected. Total T&E spending exceeded pre-pandemic levels in April for the first time," said CEO Steve Squeri.

"And we don't see demand in the T&E categories declining significantly anytime soon, based on the strength of future bookings coming through our consumer travel agency," he added.

Flight Centre 12-month price chart