The Flight Centre Travel Group Ltd (ASX: FLT) share price is in focus as the ASX travel share sees a return of demand for flying.
It has been a volatile few years for the company with the ongoing impacts on flying and the resulting financials of the business.
It was only a few weeks ago that the business announced a travel update after a "solid rebound" in travel demand globally.
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What is the company expecting in FY22?
Based on some preliminary numbers, Flight Centre is expecting to achieve an underlying earnings before interest, tax, depreciation and amortisation (EBITDA) loss of between $180 million to $190 million for the 12 months to 30 June 2022.
The mid-point of that range would be an 11.9% improvement on the mid-point in the company's initial FY22 market guidance of an underlying loss of between $195 million and $225 million.
It also represents a "material improvement" on the FY21 underlying EBITDA loss of $337.9 million.
Flight Centre expects to be breakeven, on an underlying EBITDA basis, for the six months to 30 June 2022.
Broker ratings on the Flight Centre share price
The broker UBS is 'neutral' on the business, with a price target of $18.65. That implies a small, mid-single-digit rise over the next 12 months. A problem for the sector is that there are still things holding back the industry, such as airlines reducing capacity.
Macquarie is also 'neutral' on the ASX travel share, with a price target of $18. It is keeping in mind that problems relating to slowing economic demand (such as inflation) could lead to slower travel demand.
But there are some brokers that are negative on the business.
Credit Suisse has an 'underperfom' rating on Flight Centre, with a price target of just $14. It thinks that profit margins could be challenged in the company's leisure segment. It also predicts the ASX travel share may not be able to increase prices as much as the company needs to make up for the higher costs.
Ord Minnett rates it as a 'sell' with a price target of $13.18. Part of the negativity relates to an expectation that corporate travel could suffer as the economic situation becomes more difficult.
Management comments
Flight Centre managing director Graham Turner said with the recent business update:
The scale of our recovery exceeded our initial expectations and meant that we should now exceed our preliminary FY22 result target, with early trading results pointing to a breakeven second half result and a healthy fourth quarter profit (underlying EBITDA).
There will inevitably be ongoing challenges for the industry over the next six to twelve months as new strains of the virus emerge, airline capacity returns and as we rebuild staff numbers to required levels, but we feel that we are well placed to overcome these concerns given our corporate business' continued rise and our leisure business' ongoing strength.
Flight Centre share price snapshot
Over the last month, the ASX travel share has seen its share price rise by almost 6%.
