Flight Centre Shares Fall on Trading Update
Today, travel stock Flight Centre Travel Group [ASX:FLT] released a trading update that pointed to rebounding travel demand.
Despite Flight Centre saying that the recovery in travel is afoot in most locations worldwide, FLT shares fell on Wednesday.
At the time of writing, FLT shares are down 6%, although Flight Centre is up 20% year to date.
FLT’s trading update
FLT’s trading update focused on travel recovery in the wake of COVID-19.
The company reported that EBITDA profit had returned as of March this year, with $8 million underlying EBITDA accrued.
FLT said it is close to breaking even in corporate business and leisure travel.
Gross TTV has risen 59%, nearly tripling pre-COVID levels, with Leisure up 47% and Corporate Business returning to its 76% pre-COVID gross global count.
However, the company also reported group revenue margins are still below pre-COVID levels.
FLT reported it is on track to repay its short-term £115 million loan from the UK by March.
Flight Centre is encouraged by an improved outlook, assuring the public there will be an increase in opportunities as the world reopens to travel.
Source: Flight Centre
FLT share price outlook
Despite FLT’s positive outlook, losses remain a sore issue as the company strives to make up for the period in which the pandemic forced operation shutdowns.
Cash costs then totalled $99 million, with $105 million in outflow.
Combined with group revenue, margins are still sitting below pre-COVID levels. With a modest net operating cash flow of $2 million, Flight Centre still has a while to go in its recovery.
That said, as travel begins to rise with international restrictions loosening and countries like Canada scrapping tests for fully-vaxed travellers altogether, the industry is rebounding with force.
Qantas this week reported that London, Los Angeles, South Africa, and Bali bookings have spiked above pre-COVID levels, while 60% of destinations in Asia have also begun to open up.
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For The Daily Reckoning Australia