Flight Centre share price on watch as revenue triples, reaching $1b

The travel giant appears to be making the most of the industry's recovery.

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Key points

  • Flight Centre could be one to watch on Wednesday after the ASX 200 travel giant dropped its first-half earnings 
  • It reported an underlying loss of $2.4 million and $95 million of underlying EBITDA 
  • CEO Graham Turner said the company has a "solid start to FY23 in an improved, but not fully recovered, trading environment" 

All eyes are on the Flight Centre Travel Group Ltd (ASX: FLT) share price this morning after the company dropped its earnings for the first half of financial year 2023.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel agency last traded at $18.60.

Flight Centre share price in focus as revenue triples

Here are the major takeaways from the travel giant's results:

Flight Centre posted a profitable period for both its corporate and leisure businesses, as well as all geographic segments aside from Asia.

Its global corporate travel business revealed a record $5 billion in TTV, while its leisure business posted $4.4 billion in TTV – up 150% and 441% respectively.

It ended the period with a $465 million net cash position.

What else happened last half?

But it wasn't all easy for Flight Centre last half.

Whiles its costs were 70% of pre-COVID levels in the first half, its short-term profitability was dinted by recruitment and training, development, and sustainability.

The company's revenue margin also lifted from 0.4% to 10.1% in the period. That's lower than normal amid high airfares, more air-only sales, and heavier corporate weighting.

What did management say?

Flight Centre CEO Graham Turner commented on the news likely to drive the company's share price today, saying:

Flight Centre Travel Group has delivered a solid start to FY23 in an improved, but not fully recovered, trading environment.

While we continue to monitor market conditions. we are not currently seeing evidence that the recovery is slowing with the leisure business currently trading at post-COVID highs and corporate travel activity escalating after the traditional holiday period.

While travel is a discretionary purchase, customers typically view it as essential and prioritise it above other discretionary items.

What's next?

Flight Centre notes its first-half underlying EBITDA came in 19% higher than the mid-point of its initial financial year 2023 guidance.

It's now expecting to post between $250 million and $280 million of underlying EBITDA this fiscal year, excluding the contribution of its recently acquired Scott Dunn business.

The company also points out that airline capacity is recovering, which is expected to lower the price of fares and allow for higher volumes. Its international capacity is tipped to reach 85% of pre-COVID levels by the end of June.

Flight Centre share price snapshot

The Flight Centre share price has been taking off in 2023.

The stock is currently up 29% year to date. Though, it's 5% lower than it was this time last year.

For comparison, the ASX 200 has jumped 6% year to date and 2% over the last 12 months.

Motley Fool contributor Brooke Cooper 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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