FLT - Flight Centre Travel Group

[galumay]

Indeed, nothing wrong with speculating if thats your game.

 

[sptrawler]

The problem with flight centre and others are IMO, the public is becoming more internet savvy and the carriers are wanting to cut overheads after the pandemic closures.
So whether the carriers continue the commissions to third party sellers will be interesting, post pandemic, time will tell.
But i'm not gambling.
However I do love enthusiasm.

 

[greggles]

FLT significantly lower this morning, down 3.22% to $22.21. More profit taking after running too far too fast I would think.

 

[Sean K]

FLT significantly lower this morning, down 3.22% to $22.21. More profit taking after running too far too fast I would think.

Chart looks like healthy profit taking after running to $25 and much needed correction on reducing volume, which is a positive. Heading towards 20 and 50d sma's while the longer term previous strong resistance and now support at $20 obviously still well in tact. Chart still looking good.

No idea what a fair valuation is going to be moving forward. Do they even have a useful pe ratio at the moment?

 

[galumay]

Do they even have a useful pe ratio at the moment?

You can get some sense of one by applying 2019 earnings to current capitalisation. It would be extremely optimistic obviously, but would be about 20x. You would need big cajones to take that bet!

 

[Sean K]

You can get some sense of one by applying 2019 earnings to current capitalisation. It would be extremely optimistic obviously, but would be about 20x. You would need big cajones to take that bet!

Yeah, in normal circumstances, day-to-day operations, I imaging this would have been closer to 12, pre-Covid.

 

[galumay]

Its the doubling of shares on issue that people miss, it was trading at about 17x pre covid at $40. Today its $22 and trading at 20x the same 2019 earnings!! So the market is currently valuing it higher than it did before Covid. If thats not the definition of insane, I dont know what is!!

(without even considering the explosion in debt!)

 

[greggles]

Almost every Flight Centre retail location in my area has been closed since 2020, except for one located in a Westfield shopping centre that sees a lot of foot traffic. My understanding is that they now have less than 50% of the retail outlets they did pre-COVID. Growing revenue from this position will be a very slow process.

No industry will take longer to recover from this pandemic than travel. Betting on FLT, or any other travel industry listed company, is a very risky bet IMO. People can make all the assumptions they like about how things will play out over the next couple of years, but the bottom line is nobody knows.

 

[RikFever]

I give up.

Looks like you didn't give up, someone else did. Comments have disappeared as has the user. I would have hated to pump $190k into since start of Oct off my uncles advice that's for sure

 

[Sean K]

AGM Pres out yesterday makes interesting reading on where they're sitting and expectations going forward.

Of interest to my theory that they might go back to pre-Covid booking levels within 12 months and the SP to correspond (although factoring in some forward looking price - higher pe) Skroo thinks it's not going to be until June 2024 that they will go back to 2019 TTV levels. So, I might be going to owe you a beer @greggles

 

[galumay]

The share price is already back to pre-Covid levels in real terms. (share count doubled). Massive debt now.

There is a lot of positive narrative working hard in that outlook, "leaner & more efficient" as opposed by "bloated with debt",
"customers will require more assistance", as opposed to "customers WFH & using online retail much more have learnt new skills and will need our services less"

The optimism is naive, to imagine a company that suffered such a massive destruction of its entire business model for more than 2 years will just bounce back to the level of previous business activity with no structural damage. That the share price shows the market already valuing it at 2019 steady state is truly mind boggling.

No doubt despite my thoughts, it will double in the next 6 months!!

 

[greggles]

AGM Pres out yesterday makes interesting reading on where they're sitting and expectations going forward.

Of interest to my theory that they might go back to pre-Covid booking levels within 12 months and the SP to correspond (although factoring in some forward looking price - higher pe) Skroo thinks it's not going to be until June 2024 that they will go back to 2019 TTV levels. So, I might be going to owe you a beer @greggles

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It is not going to be easy for FLT to dig themselves out of this hole they have found themselves in. Demand will not bounce back to 2019 levels quickly or easily. Lots of people have been buying property and are now mortgaged to the hilt. As a result, more people will holiday at home in the years to come. Not just because of their heavy personal debt loads, but because of the risks that international travel now pose. Getting infected by a coronavirus is a little more serious than a case of Bali Belly.

Good article here about this: https://www.abc.net.au/news/2021-10...ut-covid-makes-travel-admin-complex/100552564

There are a lot of headwinds FLT will be struggling against in the years to come. This is not a business I would invest in due largely to the inherent uncertainty. Travel is an industry that will be changed forever by COVID-19. It is difficult to know how FLT will emerge from those changes. But they are now debt laden and struggling with an uncertain future. Much better opportunities out there if you ask me.

 

[Sean K]

Another long term buying opportunity coming up with travel stocks. Going to be smashed with the Omicron variant on Monday.

What happened to the Xi variant?

 

[qldfrog]

I get Delta+ was not scary enough, have to concede these marketing teams are amazingly good

 

[StockyGuy]

Another long term buying opportunity coming up with travel stocks. Going to be smashed with the Omicron variant on Monday.

What happened to the Xi variant?

Good pick up... calling it such provocative name might've kicked off Armageddon. But then if it was that number they might've just called it X variant or something, as Greek letter xi is even harder to pronounce correctly than the Chinese name.

 

[StockyGuy]

Didn't realise they actually skipped it entirely - but to be fair they skipped the prior letter Nu for other reasons also.

WHO 'bowed to China' by skipping letter when naming new Covid variant

The agency led by chief Tedros Adhanom Ghebreyesus (pictured) announced that it would be calling the new strain Omicron - jumping over the letter Xi, the name of China's premier Xi Jinping.

www.dailymail.co.uk

 

[sptrawler]

This thread has been quiet for a long time and I have never owned them, but today shook me a bit.
I've had reason to go to the local shopping mall about 4 times this week, at the entrance is a flight centre shop, it has been packed every time I have walked past.
I wonder if the fact most travel agents have gone bust, that flight center is the last man standing, for those who don't book online?

 

[waterbottle]

This thread has been quiet for a long time and I have never owned them, but today shook me a bit.
I've had reason to go to the local shopping mall about 4 times this week, at the entrance is a flight centre shop, it has been packed every time I have walked past.
I wonder if the fact most travel agents have gone bust, that flight center is the last man standing, for those who don't book online?

The industry would have seen some consolidation, although there are still many challenges ahead. High price of oil means air travel is expensive. High interest rates means discretionary spending is going to go down. Future remains bleak IMO.

 

[qldfrog]

This thread has been quiet for a long time and I have never owned them, but today shook me a bit.
I've had reason to go to the local shopping mall about 4 times this week, at the entrance is a flight centre shop, it has been packed every time I have walked past.
I wonder if the fact most travel agents have gone bust, that flight center is the last man standing, for those who don't book online?

My personal experience: went OS in march, being in the mess of covid regulations etc, we went with flight center..first time in 15y using a travel agent for a simple return flight OS to a central America airport.
Nothing fancy multiple legs etc....
What a waste of money and effort.absolutely no support,just automated emails.most of them irrelevant.
FC was much worse than i ever inagine they could be...
Never again...i said that 25y ago..and got a lesson when i breached that promise in 2022.
They should not exist.....

 

[bigdog]

Flight Centre share price tumbles on uncertain growth outlook​

ASX 200 investors are selling down the Flight Centre share price despite the company highlighting the efficiency and productivity improvements achieved since the global pandemic.

In FY 2019, Flight Centre had a revenue margin of 12.9%, which improved to 11.4% in FY 2024. On the cost front, the underlying cost margin dropped from 10.9% in FY 2019 to 9.6% in FY 2024.

Management credited the margin improvement to business mix changes (growth in corporate and lower margin leisure businesses) and commission cuts from some airlines during the pandemic.

The cost margin improvement was said to reflect structural changes made during the pandemic along with economies of scale.

FY 2024 also saw Flight Centre achieve record operating cash inflow of $421 million and a record Total Transaction Value Record (TTV), which the company said was delivered with less than 90% of its traditional cost base.

The company also noted that it now has a heavier second-half "earnings skew", with almost two-thirds of FY 2024 underlying profit before tax generated in the latter six months of the financial year.

Looking ahead into FY 2025, management expects profits will again be heavily weighted to the second half. The ASX 200 travel stock will provide market guidance at its AGM on 14 November.

The Flight Centre share price looks to be catching headwinds as the company expressed a fair amount of uncertainty over the year ahead.

While trading was said to be "marginally above" FY 2024 Q1 in terms of TTV, profit margin and underlying profit, the company said it was "currently too early to draw conclusions as to likely trading patterns over full year".

While there are similar trends in the early months of FY 2025 to the late months of FY 2024, there was "some inconsistency month-to-month".

Management said they are currently expecting normal industry growth over the full year, with 4% to 5% growth in Australian outbound travel. Declining airline ticket prices remain in focus.

The company aims for a 2% underlying profit before tax margin in FY 2025, and overall profit growth is its main priority.