Needless to say, shareholders of Flight Centre Travel Group Ltd (ASX: FLT) have endured a turbulent journey over the past year or two.
Flight Centre was, of course, one of the worst-hit ASX shares of the original COVID-19 crash of 2020. But saying that, the past year has actually been very kind to this ASX travel company.
Until about a fortnight ago, the Flight Centre share price had gained roughly 20% over the preceding 12 months. Even as it stands today, Flight Centre shares are still up by 7.7% over the past year.
At the time of writing, the Flight Centre share price is $15.51, up 0.06% today.
Now, shareholders are awaiting the next set of results from Flight Centre. This will be the company’s half-year earnings report for FY2022, which is due on 24 February.
But in the meantime, let’s talk about dividends.
Flight Centre used to be a relatively strong ASX dividend-paying share. Back in 2018, the company paid out 2 dividends. They were a 70 cents per share interim payment and a $1.07 per share final dividend.
In 2019, Flight Centre ratcheted this up significantly. Not only did the company pay an interim dividend of 60 cents and a final dividend of 98 cents, it also doled out a special dividend of $1.49 per share.
Unfortunately, Flight Centre shareholders’ dividend income stream has all but dried up. The company has not paid out any income whatsoever since that final dividend in October 2019.
So when might that change for Flight Centre? When will this company’s dividends take to the sky once more, if you’ll pardon the pun?
When will Flight Centre’s dividends get off the ground again?
Well, that’s a tough question. For Flight Centre to be able to pay out dividends again, it first needs to be profitable. An unprofitable company can’t fund dividend payments, at least not for very long.
And unfortunately, it doesn’t look like Flight Centre is close to being sustainably profitable. Back in its last quarterly trading update, Flight Centre reported a net operating outflow of $41 million for the 3 months to 30 September 2021. Over FY2021, the company also reported a net underlying loss of $507 million before tax.
So obviously with no positive cash flow, there can’t be any dividends for shareholders.
Until this situation reverses, it’s highly unlikely that Flight Centre will be able to fund dividend payments. So we’ll have to wait and see what Flight Centre’s half-year earnings tell us next month.
Given the emergence of Omicron, it’s unlikely that the company’s balance sheet over the second half of last year improved enough to reach strong profitability. But we shall have to wait and see what the company says next month to know for sure.
At the current Flight Centre share price, this ASX travel share has a market capitalisation of $3.09 billion.