SYDNEY Feb 23 Australia's biggest listed travel
agent, Flight Centre Travel Group Ltd, cut guidance and
reduced its dividend after unprecedented airfare discounting
pushed it to a 36 percent half-year profit drop.
While the airfare price war has also hit earnings at Air New
Zealand and Qantas, the result from the
bricks-and-mortar travel agent contrasts with online-only agency
Webjet Ltd, which reported a record half-year profit
after the market closed on Wednesday.
Flight Centre, which mostly relies on selling flights and
holiday packages to customers in its stores in Australia, but
also operates subsidiaries in the United States, Britain, Europe
and Asia reported underlying pre-tax profits of A$113.2 million
($87.2 million) for the six months to Dec. 31.
The after-tax figure of A$74.4 million is down 36.2 percent
on a year earlier and tracks well behind market expectations for
the company's full-year profit.
Flight Centre's managing director Graham Turner said that
heavily discounted fares on routes to the United States, New
Zealand, Singapore and India had boosted sales, but not earnings
since the second half of last financial year.
"This discounting, which was driven in Australia by rapid
airline capacity growth during the 2016 calendar year, has
delivered unprecedented airfare bargains to our customers, but
has affected total transaction value and revenue," he said.
Flight Centre also said it was hit by adverse foreign
exchange movements, and reported falling earnings in Asia, the
Middle East and the United Kingdom.
Flight Centre announced an interim dividend of 45 cents,
lower than the 60c it paid a year ago. Its revised guidance
forecasts an underlying pre-tax profit between A$300 million and
A$330 million, below last year's figure of A$352.4 million. In
August, the company said it hoped to grow underlying profit in
Travel agent disruptor Webjet reported an 86.9 percent
profit leap to A$20 million late on Wednesday after stripping
out one-off gains from an asset sale, beating its own guidance
and market expectations while also upgrading its outlook.
($1 = 1.2989 Australian dollars)
(Reporting by Tom Westbrook; Editing by James Dalgleish)