Flight Centre Travel Group Ltd (ASX: FLT) shares are sliding today.
Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $10.28. In early morning trade on Tuesday, shares are swapping hands for $10.14 apiece, down 1.4%.
For some context, the ASX 200 is down 0.6% at this same time.
This underperformance follows a trading update, released this morning at Flight Centre's Investor Day presentation.
Here's what investors are mulling over.
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Flight Centre shares dip on ongoing Middle East headwinds
The first three quarters of FY 2026, covering the nine months to 31 March, saw Flight Centre achieve some solid growth metrics. That included a 7.6% year-on-year increase in total transaction value (TTV), which reached $19.5 billion.
Today Flight Centre shares look to be catching some headwinds after the company reiterated that its early fourth quarter performance (Q4 FY 2026) has been "heavily impacted by Middle East tensions".
Management noted these impacts are continuing into May, primarily hitting its leisure business. The company estimates that the conflict already shaved off some $10 million in profits in April, driven by increased refunds.
And with the busier travel season kicking in, the company expects to see an even bigger negative impact in the second two months of Q4.
According to management:
May and June are typically stronger leisure trading months and ongoing volatility leading to cancellations, refunds and reduced forward bookings could be expected to have greater impact in those months
Then there's the rising Aussie dollar.
Currently trading for 71.7 US cents, the Aussie dollar has appreciated by 10.6% over the last 12 months.
This could also pressure Flight Centre shares, with the company noting that the Australian dollar's strength will impact its Q4 overseas profit translation compared to last year.
On a more positive note, the ASX 200 travel agency said its corporate business has not been significantly impacted by the outbreak of the Iran war. The company added that it is "monitoring possible flow on effects from higher airfare pricing and macro-economic factors if volatility continues".
Management noted that any negative impacts to Flight Centre's corporate business will more likely arise in early FY 2027.
Flight Centre said it is responding to the more difficult conditions by focusing on cost discipline, with its cost margin declining to 9.2%.
The company is also promoting short to mid-haul international and domestic travel itineraries to increase its market share. And management said Flight Centre is preparing for a rebound in demand as "conditions stabilise".
With today's intraday losses factored in, Flight Centre shares are down 32.3% in 2026, trailing the 0.9% year to date losses posted by the ASX 200.
