FLT - Flight Centre Travel Group

[sptrawler]

I sometimes book through Flight Centre but they hardly make any profit from it. I shop around online and then get Flight Centre to price match. The reason for doing this is if something goes wrong and I have problems, as a customer Flight Centre are relatively easy to deal with and I just deal with one port of call instead various airlines, etc.

That is a good point, I tend to book everything myself, but your reasoning is pretty sound, maybe there will be a reconfiguring and consolidation in the industry.

 

[galumay]

It is a business with a limited shelf life.

I think you will find that part of the business is not their focus anymore, look at what they are doing with the B2B part of the business, thats where the growth and future lies I suspect.

They are pivoting away from the online travel agent model, which as you say has limited utitlity once the boomers drop off the perch.

 

[Value Hunter]

Galumay I think they are a lagging the game in corporate travel. Specialized companies like Corporate travel management and many others are way ahead of them in that space. Besides if all the traditional retail travel agents start like Flight Center decide to get into the corporate travel game then margins in that niche will go down.

Look they might end up doing okay in the long run given the strong balance sheet and high insider ownership of shares but I would not be confident enough to bet on them.

 

[galumay]

My bad, You are correct VH, I was thinking about WEB and their pivot to the B2B sector. Got my companies mixed up!

(I have no interest in investing in either of them!)

 

[finicky]

I'm going to watch this as well as WEB, SLK and a few other travel related. Long term monthly charts look pretty precarious to me. I'd consider buys if FLT or WEB went into GFC scale corrections.

Not held

 

[sptrawler]

Flight centre get virus hit.
https://www.smh.com.au/business/com...big-hit-from-coronavirus-20200227-p544uf.html
Flight Centre has cut its full-year profit guidance by 22 per cent, to between $240 million and $300 million, as the coronavirus outbreak crushes travel demand globally.

The travel booking group also cut its interim dividend after delivering a weak set of half-year results on Thursday

 

[sptrawler]

Another article, says NPAT down 74% on prior corresponding period.
https://www.finnewsnetwork.com.au/archives/finance_news_network275352.html
Flight centre travel group (ASX:FLT) report a net profit after tax (NPAT) of $22.1 million, that’s 74 per cent less than the prior corresponding period.

They have slashed their second-half predictions for underlining before tax profit by up to $70 million over uncertainties from the coronavirus outbreak.

Companies amending their travel policy regarding the coronavirus has impacted Flight Centre particularly during the last three weeks.

Leisure travel patterns have also been increasingly affected recently, with some customers reviewing or reconsidering short-term holiday plans and monitoring the virus’s possible spread to locations outside China and Asia in the future.

They will pay a final dividend of 40 cents.

Shares in Flight centre travel group (ASX:FLT) are trading 0.69 per cent higher at $35.24.

 

[finicky]

Yes and that $240-300m figure is for underlying Profit Before Tax and there is already a significant reduction of the bottom line to that from one off expenses and a large non cash impairment in the value of a UK business. Flight can go through massive corrections and this might be setting up for one.

 

[fiftyeight]

Haha LEGEND, are you tracking this for many companies???

So either I am wrong or maybe I am asking the wrong question or both.

My thoughts were that FLT are maintaining profit by squeezing staffing costs. But I guess that would not be reflected in their margins until they reach the point where they cannot squeeze the staff anymore.

A few of the girls I know used to make good coin with the commission structure. Good staff could crack $100k in a good store and good managers in good stores could crack $200k. Great job in their 20s, lots of travel, good culture and much better than most other retail jobs out there.

Most moved have moved on as they were not sales people and were not making the big $$$ but the couple who were making good $$$ as they were good at sales have recently left or are looking to move on. To compete with the online world FLT has capped the commish the agents can charge and changed the structure making it almost impossible for even good agents to make good money.

So for the young people working at FLT for a bit of fun, not much changes and FLT save some staffing costs. But this comes at the expense of now losing some really good sales people.

At some point this has to hurt the business? or are FLT banking on their structure and processes being good enough they can lose these good sales people? If this is the case and maybe it already is, FLT are just resellers competing on price with the online world.

The recent share price rise implies different but being stuck in that game does not sound like a good idea.

I guess one answer could be that FLT have already lost as much market share to online as they are going to and now its about capitalising on what they have left. Again though that seems very dangerous as people become more tech savy.

There is a massive risk from Google Travel (GT) and AI/ML. Planning a holiday will become much easier with the assistance of GT if they really go after it. Enter in some rough dates, sites and/or places and boom GT with the data on you Google already have on you can plan a trip with suggestions.

https://www.forbes.com/sites/geoffw...oogle-flights-google-trips-more/#5027e3154d98

Or maybe people just take this info in to FLT to book and Google really dont care where you book as long as Google is where you do you holiday planning?

Or maybe if people are more price educated on their holiday it places more price pressure on FLT as people will take in their quotes.

Or or or........ guessing the future is hard haha much more pondering on this required

Daaaaamn FLT has been smashed. What a missed opportunity....again. Company already in trouble and exposed to a sector that was bound to be hit hard by covid-19.

Bit annoyed at my self for missing a FLT short for a second time.

 

[tech/a]

Must say I’ve been really impressed from a strictly business view point with the way Flight Center and Qantas have responded to these in believable business capitulation.

Their actions will mean there will be companies for their staff to come back to.

 

[greggles]

I'm wondering if things will ever be the same for FLT after this. I suspect the travel industry will take years to recover and many Australians are now more likely to holiday at home rather than travel overseas. The psychological scars from this coronavirus outbreak are going to take a long time to heal.

Add to that the ease of online booking in 2020 and I think that it is inevitable that the role that FLT plays in the travel industry in the future will slowly decline. Essentially the bulk of their revenue comes from commissions from airlines and hotels and other service providers such as tour operators. There is a lot more direct advertising from these kind of companies now and I think the days of package holidays organised by a third party such as FLT now represent a much smaller slice of the travel industry pie than it did say 20 years ago.

Does any here use Flight Centre regularly? I used to use them quite a bit in the 90s and 00s, but since 2010 I haven't used them once.

 

[Country Lad]

Does any here use Flight Centre regularly? I used to use them quite a bit in the 90s and 00s, but since 2010 I haven't used them once.

Nope, haven't used a travel agent since Europe trip in 1991 and that was the only time - a family business which I had an incentive to use. Country Lass worked in the aviation industry so we have many opportunities for all sorts of deals not available through travel agents. A bit cranky that we will not be able to travel for some time.

 

[CBerg]

Family member worked for Hello World and we used her for international travel, nice and easy outsourcing the painful work sometimes.

That said, she was let go by the agency at the start of this month so pretty unfortunate.

 

[Dona Ferentes]

“The market’s going to be smaller, we’re going to be a lot smaller than we have been”

G Turner, CEO, Flight Centre Travel Group Ltd

....it's a volume based biz. Can't see any reason to get excited

 

[Dona Ferentes]

a tale of three operators / intermediaries, 6 month chart, % drop
FLT : FlightCentre in purple
WEB : Webjet in Blue
HLO : Hello world in red

A pretty unanimous dumping of all stocks during the early days of the pandemic. Maybe HLO has a larger AUS based travel, tour and accommodation business as it is recovering somewhat??

 

[finicky]

Wish I had a clue whether this is 'smart money' accumulating.
Not Held

Chart is all data Qtrly periods

 

[galumay]

At some point its cheap, there will be a business there after this passes, it can survive based on its cash reserves and lack of debt. Trick is knowing when to pull the trigger!

 

[Value Hunter]

Galumay Flight Centre will survive no doubt and if it was just a matter of Covid I would say its a buy as some of their smaller competitors going out of business will increase their market share in the brick and mortar travel space.

But the real issue with a stock like Flight Centre has already been discussed long ago on this thread by us both is that its a structurally challenged business. The brick and mortar shopfront travel business is an outdated business that will gradually die off as the baby boomer generation passes the travel phase of their lives and enters the aged care home phase en mass.

Even if they manage to successfully pivot most of that business into the online space, it will be lower margin business operating in a more competitive space against more and larger competitors with a more price sensitive customer base as Millennials, etc. are more likely to shop around on Sky Scanner, Expedia, Webjet, Hotels.com, etc and force Flight Centre to price match those prices thus crushing their excess margins that they have been able to earn in the brick and mortar business. And in terms of the Corporate travel segment they have much lower market share and their customers on average are larger and more well informed (corporations, etc), so it won't be easy to try and grow there either. Although some companies like Corporate Travel Management seem to have done well out of the corporate travel space.

 

[frugal.rock]

Wish I had a clue whether this is 'smart money' accumulating.
Not Held

Would you think the dumb money is?
Not sure why the smarts would be either...
Any semblance of pre covid normalised air travel again is a long time away... being physically able to is one thing, the choice and cost to do so is another.
Corporate travel will be unlikely to recover to what it was.
Although, the SP will no doubt go bonkers on any news of international borders opening.

 

[sptrawler]

I wonder if the operators re claim the cancelled fares, then pay them out on an as requested basis. Maybe a lot of people just write it down to experience, or claim it on travel insurance.