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The Flight Centre Travel Group (FLT) demonstrated a remarkable financial recovery in the fiscal year 2023 (FY23), marking a 265% year-on-year improvement by recording $301.6 million in underlying earnings before interest, tax, depreciation, and amortization (EBITDA), a stark contrast to the $183.1 million underlying loss in FY22. This resurgence was underpinned by a 112% upswing in total transaction value (TTV) to $22 billion, solid cash generation, efficiency gains, and the successful execution of global strategies.

In a resilient travel market, the group’s underlying profit before tax (PBT) totalled $106 million, a significant recovery from a $361 million loss in FY22. This result was buoyed by a 70 basis point improvement in revenue margin and a record-low 9.6% underlying cost margin. The strong profit recovery paved the way for an 18 cents per share fully franked final dividend for shareholders and the introduction of a new capital management policy effective from FY24.

A solid second-half (2H) performance further reinforced the recovery trajectory, with almost 70% of underlying EBITDA generated from six months to June 30, 2023. During this period, we marked improved market conditions following the global removal of travel restrictions, capacity growth from crucial airline partners, and normal seasonality. FLT supported plans by airlines, including Qatar Airways and Turkish Airlines, to boost tourism and deliver cheaper airfares to travellers by increasing traffic to Australia.

Key global strategies were successfully executed during FY23, leading to ongoing cost discipline, strong productivity, and efficiency gains. Operating expenses were maintained at 75% of FY19 levels, while the average TTV per full-time employee (FTE) increased by 52% compared to FY19. The “Grow to Win” strategy was instrumental in FLT outpacing the broader industry recovery in the $1.4 trillion global business travel sector. This was achieved through high customer retention, large volumes of new account wins, and cost-effectively capturing leisure TTV through a modernized Flight Centre brand.

Investments in growth drivers, network enhancements, and technology contributed to increased scale, brand and geographic diversity, and improved customer access to businesses and services. FLT leveraged artificial intelligence (AI), machine learning, and robotic process automation (RPA) to deliver a better customer experience and achieve its sales and savings objectives.

Managing director Graham Turner expressed satisfaction with the material profit and sales uplifts in improved conditions during FY23. He highlighted the group’s successful execution of critical strategies, leading to higher revenue margin, record-low cost margin, and underlying earnings per share growth to 36.9 cents. Turner emphasized the reinforced balance sheet and re-established foundations for more robust short and long-term shareholder returns.

FLT’s corporate travel business continued outperforming in the global corporate travel sector, delivering a record TTV of $11 billion during FY23. This represented a 96% year-on-year growth and an almost 25% increase on the previous TTV record. Corporate transaction volumes also exceeded pre-COVID levels, driven organically through high customer retention rates and a large pipeline of global account wins for FCM (large market sector) and Corporate Traveller (SMEs/start-ups).

In the leisure segment, global leisure TTV increased by 162% to $10 billion during FY23 at improved revenue and cost margins. This drove a 207% increase in underlying EBITDA to $172 million, as all four pillars of the leisure business (Mass Market, Independent, Luxury, and Complementary) delivered profits. The mass market Flight Centre brand remained the major profit contributor, maintaining a high market share in its key markets of Australia, New Zealand, and South Africa.

Looking ahead to FY24, Turner expressed optimism about capitalizing on opportunities as the industry recovery continues. He noted solid TTV and profit growth in early trading and a resilient travel market compared to other sectors.

Revived Business Travel Fuels Unprecedented Growth for Flight Centre Corporate in Australia and New Zealand.

In a booming testament to the resilience of the corporate travel sector, Flight Centre Corporate’s ANZ Managing Director, Melissa Elf, declared that business travel in Australia and New Zealand is not just surviving but thriving. “Travel is back, and it’s more essential than ever for the corporate landscape,” said Elf, signalling the industry’s roaring comeback after overcoming numerous challenges.

In the wake of relaxed travel restrictions from the United States and China, the travel management company’s ‘Grow to Win’ global initiative has taken off in full force. Elf attributed the success to sustained customer loyalty and an uptick in new account acquisitions, particularly in the SME sector and among large-scale industry leaders.

“Interestingly, business travel seems to be recession-proof for the corporate sector,” Elf revealed, citing a recent survey by Corporate Traveller, which found that a staggering 91% of small-to-medium enterprises (SMEs) are committed to maintaining their travel budgets, even if Australia faces an economic downturn.

Flight Centre Corporate reported record-breaking turnovers for the fiscal year ending in 2023, cementing its industry standing. “It’s not just a flash in the pan,” noted Elf. “What we initially believed to be a temporary surge has solidified into a new business paradigm.” Among the client wins were global giants like Shell and domestic stalwarts like Wesfarmers. These successes have been paralleled by burgeoning arts, culture, and entertainment markets, managed by the company’s specialized Stage and Screen division.

According to Elf, year-over-year business travel has skyrocketed by 172%, affirming unwavering confidence among corporate clients. Advance travel bookings have also increased in duration, extending from an average of 15 days to 20 days.

The industry’s robustness is exemplified by the bustling activity among Australia’s ‘Golden Triangle’—Sydney, Melbourne, and Brisbane—which Elf describes as the “beating heart of the Australian economy.” These regions have seen a tremendous surge in flight bookings.

As for the sectors fueling this travel boom, the leading industries are Mining/Oil/Gas, Government/Non-Profit organizations, Construction, Services, and Health Care and Social Assistance.

“With a forward-looking vision towards fiscal year 2024, we extend our deepest gratitude to our clients who have been instrumental in this remarkable journey,” Elf concluded. The data seems to align with her optimism, as Flight Centre Corporate positions itself as a critical component of the resurgent corporate travel landscape in Australia and New Zealand.