The Flight Centre Travel Group Ltd (ASX: FLT) share price is up 4% after the ASX travel share gave a FY23 update.
Flight Centre is one of the largest travel agent businesses in Australia. It has told investors what it’s expecting to report in its FY23 result.
FY23 update
The company said that based on preliminary trading data, it now expects to report underlying EBITDA (EBITDA explained) of between $295 million to $305 million for FY23.
This midpoint of guidance of $300 million represents an increase compared to the previous midpoint of guidance of underlying EBITDA of between $270 million to $290 million.
The new guidance of $300 million also represents a $483 million underlying EBITDA loss in FY22.
Total transaction value (TTV) for FY23 is expected to be around $22 billion, almost 115% higher than FY22, and the company’s second strongest full year result behind FY19 (which was $23.7 billion).
Flight Centre said that corporate TTV for FY23 is expected to be $11 billion, which is 20% higher than the previous TTV record of $8.9 billion in FY19. There has been a gradual recovery of client activity, and it has also won a multi-billion-dollar pipeline of new accounts.
Global leisure TTV for TTV is expected to be around $10 billion, after a “strong and consistent recovery” during the year’s second half.
Management commentary
The Flight Centre Managing Director Graham Turner said:
Overall, we are pleased with our continued recovery as demand has generally rebounded solidly across both our leisure and corporate travel businesses.
Looking ahead, our expectations are that leisure travellers will continue to prioritise holidays and experiences over other areas of discretionary spending, as we have seen in the past and as evidenced by the consistent year-on-year growth in outbound travel in large and important markets like Australia.
In corporate, we expect that the large volume of new business that we continue to win – both from competitors and accounts that were previously unmanaged – will offset the impact on TTV flowing from lower-than-normal client spend.
Final thoughts on the Flight Centre share price
The market seems to have now factored in this latest profit update and the general recovery of travel. I’m pleased for shareholders, but I wouldn’t say this is the best opportunity on the ASX right now because of a possible slowdown of demand due to economic conditions. For me, there are other opportunities that could deliver better returns, particularly in the ASX growth shares space.
