The Flight Centre Travel Group Ltd (ASX: FLT) share price is up 8.7% today after the group announced it expects to achieve an underlying profit before tax between $325 million to $330 million for the 12 months ending June 30 2017.
This is at the top end of Flight Centre's previous guidance and is the result of a strong quarter ending June 30 2017 as the group posted "record full year sales and solid second half profit growth".
For the second half underlying profit growth is expected to be 2.5%-4.9% above the prior corresponding half thanks partly to a reversal in the fortunes of the group's key overseas markets of the U.S. and U.K. Notably, both these major economies have been in robust shape, despite some political upheaval over the period.
The other salient factor is that average ticket prices rebounded over the six-month period ending June 30 2017, after a major slump in tandem with jet fuel prices over the whole of calendar year 2016.
As a result of the tumbling ticket prices over the six-month period ending December 31 2016 Flight Centre delivered an underlying profit before tax of just $113 million, compared to $146 million in the prior corresponding half. It was these steep profit falls that emboldened the group's critics and short sellers whom recently accounted for more then 12% of the stock on issue.
However, it seems the short sellers misunderstood the business and part of today's share price rise is related to short sellers buying back shares at a loss as a result of the strong second half.
Flight Centre shares are changing hands at a 52-week high of $43.44 this afternoon and investors will hope that the return to higher airfares is sustained.
Others in the travel space such as Corporate Travel Management Ltd (ASX: CTD) and Webjet Limited (ASX: WED) have enjoyed a strong day, with their shares up 1.5% and 1.8% respectively near record highs.
