Flight Centre (ASX:FLT) share price falls following Q1 update

Here’s how Flight Centre is performing…

| More on:
A woman wearing a mask at the airport gets ready to travel again with Qantas

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Flight Centre Travel Group Ltd (ASX: FLT) share price is falling on Wednesday.

In morning trade, the travel agent giant’s shares are down over 1% to $22.44.

Why is the Flight Centre share price falling?

Investors have been selling down the Flight Centre share price today following the release of a trading update at its annual general meeting.

According to the release, during the month of September, Flight Centre’s sales reached 27% of pre-COVID levels globally.

As per previous updates, the corporate side of the business is improving at a much quicker rate. Its sales were at 41% of pre-COVID levels during the month, with leisure sales tracking at 14% of pre-COVID levels.

However, this wasn’t enough to make the company cash flow positive during the month. Flight Centre needs to achieve 50% and 40%, respectively, to reach breakeven within each of these divisions. In light of this, Flight Centre recorded a net operating cash outflow of $41 million for the period.

Management commented: “Cash outflows impacted by decreased revenue during ANZ lockdowns, seasonality (extended Northern Hemisphere summer holidays), removal of government subsidies & significant investment ramp-up ahead of anticipated surge in demand when borders reopen.”

In respect to quarterly sales, the company generated almost $1.6 billion in gross total transaction value (TTV) during the first quarter. This represents an 8% increase on its fourth quarter result, despite the quarter traditionally being a softer trading period.

Current trading

Not even management’s positive commentary on current trading conditions in Australia has been able to stop the Flight Centre share price from falling.

It advised that there are positive early signs in the domestic market, with a surge in enquiries and bookings growth in October.

In addition, the company advised that international leisure bookings have now surpassed domestic bookings in Australia for the first time since the start of the pandemic. They almost tripled between July and September. This is a big positive as its Australian leisure business is very heavily weighted towards international travel. In fact, international travel represented more than 80% of its pre-COVID total transaction value.

Overall, booking numbers this month have already surpassed the September total with more than a third of the month still to come.

But as promising as this is, it hasn’t been enough to keep the Flight Centre share price from dropping into the red today.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Share Market News

Rival hands reaching upward for a company trophy or prize.
Share Market News

Here are the top 10 ASX 200 shares today

These ASX 200 shares outperformed all their peers on Friday.

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Bank Shares

What’s moving the CBA share price this week?

CommBank shares traded ex-dividend on Wednesday this week.

Read more »

A woman stands on the roof of a city building as papers fly in the sky around her.
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Friday

We take a look at the most traded ASX 200 shares today...

Read more »

Two men in suits face off against each other in a boing ring.
Cryptocurrencies

The Aussie-born crypto platform taking on Ethereum

A new platform is being launched by a 25-year-old Aussie millionaire.

Read more »

A woman shouts through a megaphone.
Share Market News

Earnings preview: Here’s which ASX shares are reporting today

Wondering which ASX companies are releasing results on Friday?

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Share Market News

5 things to watch on the ASX 200 on Friday

The ASX 200 looks likely to have a decent finish to the week...

Read more »

A group of happy office workers throw papers in the air and cheer after seeing the Latrobe Magnesium price skyrocket 38%
Share Market News

Here are the top 10 ASX 200 shares today

These ASX 200 shares outperformed all others on Thursday.

Read more »

Three male athletes sprint on an athletics track with the sun low on the horizon behind them representing the race between ASX lithium shares to outperform
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Thursday

Our most traded ASX 200 share today is down by more than 5%.

Read more »