Flight Centre (ASX:FLT) share price drops despite UK update

The Flight Centre Travel Group Ltd (ASX:FLT) share price is trading lower on Tuesday despite the release of a positive announcement…

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is trading lower on Tuesday despite some positive news out of the travel agent giant.

At the time of writing, the Flight Centre share price is down over 1% to $16.84.

What did Flight Centre announce?

This afternoon Flight Centre provided an update on its UK COVID-19 loan and funding.

According to the release, Flight Centre has been approved to extend the short-term 65 million pounds loan it received last year under the Bank of England’s COVID Corporate Financing Facility (CCFF).

These funds were were initially made available for 12 months to support short-term liquidity as the company worked to overcome the disruption caused by COVID-19 and the restrictions that were applied to slow the spread of the virus.

This term was due to end in March 2021, however, the Bank of England has now approved a 12-month extension through to March 2022.

In addition to this, the central bank has made an additional 50 million pounds debt facility available through to March 2022.

Last month the company revealed that it had liquidity of $1.2 billion at December 31. This includes the initial 65 million pounds loan but not the addition 50 million pounds debt facility.

Flight Centre’s Managing Director, Graham Turner, commented: “While some positive signs are emerging, the travel, tourism and aviation industries still face significant challenges while widespread travel restrictions are in place. We thank the Bank of England for its ongoing and proactive support, which will help businesses save jobs and weather the near-term challenges.”

Is the Flight Centre share price in the buy zone?

One leading broker that sees value in the Flight Centre share price is Macquarie.

According to a note out of investment bank last week, its analysts upgraded the company’s shares to an outperform rating with an improved price target of $20.00.

Based on the current Flight Centre share price, this implies potential upside of 19% over the next 12 months.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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