This ASX travel share has been flying high in the past 6 months. Flight Centre Travel Group Ltd (ASX: FLT) shares have taken off 32% to $16.45, at the time of writing.
After years of stop-start recovery and muted investor confidence, the ASX travel share has suddenly emerged as one of the stronger performers on the ASX.
It's signalling that the travel giant's turnaround story may finally be gaining traction.
Stronger profitability outlook
The rebound of the ASX travel share reflects more than just improving sentiment. Investors have responded to a clearer earnings recovery path, firmer guidance, and signs that global travel demand is proving more resilient than feared.
With expectations reset low, Flight Centre has benefited from delivering stability where volatility was once expected. A key driver behind the rally has been the company's improving profitability outlook. Management of the ASX travel share has flagged stronger underlying earnings, supported by tighter cost discipline and steady booking volumes.
Corporate travel continues to recover gradually and remains an important earnings anchor, offering higher margins and more predictable demand than leisure travel alone.
Takeover UK cruise agency
The narrative shifted further with Flight Centre's acquisition of Iglu, with $200 million upfront and $54 million in performance-based targets. It's the leading cruise agency in the UK. The takeover significantly expands the ASX share's exposure to the fast-growing cruise segment, which has shown strong demand and attractive margins.
More importantly, Iglu brings a highly scalable digital platform and a strong European footprint, helping modernise Flight Centre's leisure offering and accelerate its shift away from a purely store-led model. Investors have welcomed the deal as a strategic move rather than a defensive one.
The acquisition could boost earnings per share (EPS) by around 5% to 6% in FY27 and FY28, assuming the cruise division grows at 7% per annum.
Fierce online competition
However, the risks for the ASX travel share haven't disappeared. Travel remains cyclical, and any sharp slowdown in consumer spending would quickly test earnings momentum.
Competition from online-only platforms continues to intensify, while Flight Centre still carries a relatively high fixed cost base due to its physical store network. Margins remain thin, leaving little room for execution errors.
What's next for Flight Centre?
Even after the recent surge, analyst sentiment remains broadly supportive. Consensus expectations point to further earnings growth over the next year, with many analysts arguing the stock still trades below its longer-term potential if management executes well.
Morgan's retained its buy rating on Flight Centre. The broker has set an average 12-month price target of $18.38, suggesting 12% upside.
For now, Flight Centre is doing something it hasn't managed in a while — delivering positive surprises. The Iglu acquisition has added a fresh growth angle.
If travel demand holds up, the recent rally of the ASX share may prove to be more than just a short-term bounce.
