Skroo starts to see travel rebound despite government ‘paralysis’
Flight Centre will be back making profits again in late 2021 for its corporate travel and some time in 2022 for its leisure division, shareholders have been told.
Flight Centre has upgraded its earnings again. (Photo: Dan Himbrechts/AAP)
At its annual general meeting today, Flight Centre managing director Graham “Skroo” Turner said the company’s business in China and the United Arab Emirates had also returned modest profitability. There is also a lot of pent-up demand with surveys indicating that 60 per cent of people would consider an international holiday within 12 months of restrictions being lifted.
Almost half of the customers who planned to travel domestically favoured Queensland as a destination.
The company’s shares jumped 4 per cent this morning on the news.
He also had another shot at the Palaszczuk Government over its border restrictions accusing it of “decision-making paralysis”.
The company’s cash burn has fallen to about $4 million a month and revenue for September was $25 million, about 12 per cent of its normal level. Corporate travel was 18 per cent of normal revenue for the month and leisure was at 8 per cent, but several businesses were at 20 per cent which put them close to breakeven.
“Some heavily affected travel sectors are also starting to show modest signs of recovery,” Turner said citing the relaxation in the US of cruise restrictions.
However, he said short term revenue generation would come from domestic travel and business travel was likely to be profitable again on a month-to-month basis in late 2021.
“The global leisure business, which has a higher cost base and a heavier international travel weighting, is expected to follow in 2022, although recovery in both sectors will largely be in the various governments’ hands,” Turner said.
“In Australia, we are generally pleased with developments, including yesterday’s NSW-Victoria announcement and national Cabinet’s commitment to reopen borders by Christmas (possibly excluding Western Australia).
“There also appears to be decision-making paralysis in Queensland with the State Government adopting a set position that it will only consider border re-openings towards the end of each month, rather than moving as quickly as possible, which appears the more logical position to adopt on an issue as important as this.
“While the recovery timetable is unclear, I am optimistic that travel’s medium-term outlook is fairly bright, particularly if there an effective vaccine late this calendar year or early in 2021.”
