Flight Centre Travel Group Ltd (FLT)
BUY

Back in business class

 20 Jul 2023
Sector: Consumer Discretionary

TRADING UPDATE

Need To Know

  • Upgraded FY23 EBITDA by ~7% at the midpoint to $295-$305m (vs $270-$290m and consensus of ~$280m)
  • Earnings boost driven by corporate wins during the pandemic which are beginning to ramp up travel spending
  • FY23 only ~7% below FY19 levels and we expect continued travel recovery momentum into FY24

Investment Implications

The upgrade is evidence that people are continuing to spend on travel and experiences despite rising cost of living pressures. FLT noted in the release that it continues to expect leisure travellers will prioritise holidays over other areas of discretionary spending, in line with what has been seen in the past.

Importantly, the trading update today further demonstrates the value of corporate client wins during the pandemic, with the investment in system upgrades paying off. Corporate TTV is expected to reach $11bn, above the $8.9bn achieved in FY19. FLT expect to coninute winning corporate clients from competitors and accounts that were previously unmanaged which should offset any impact from lower than normal client spend.

Investment View

The upgrade is another positive sign from management that the 2% PBT target in FY25 is achievable. We expect continued TTV growth momentum into FY24, and the new more productive and efficient leisure business should start to further contribute to margins. Full year FY23 results are set to be released on 30 August 2023 where we expect a more formal outlook and guidance update. We retain our Buy rating.

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Stock Overview

Share Price

Company Overview

Flight Centre Travel Group Limited is a travel retailer and corporate travel manager operating in over 20 countries across over 40 brands.

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