The Flight Centre Travel Group Ltd (ASX: FLT) share price is up more than 5% after the ASX travel share’s UK acquisition announcement.
Flight Centre is a travel agent business for households and businesses.
UK acquisition
Flight Centre has announced it has agreed to acquire Iglu, which it described as the UK’s leading online cruise agency.
The company pointed to a number of positives including its cruise footprint, delivering scale, advanced technology and broader access to the UK, which is the world’s third-largest cruise market.
Flight Centre noted that cruise is a rapidly growing leisure sector, with sales at both Flight Centre and Iglu increasing at between 15% to 20% year on year. This is driven by a “resilient customer base and a supply chain that is investing heavily in new ships and partnerships.”
Iglu also has an attractive margin profile, according to the ASX travel share – it had a 3.1% EBITDA (EBITDA explained) margin in FY25 compared to 2.2% for the entire Flight Centre business.
Flight Centre said Iglu is forecast to deliver £14.8 million in adjusted EBITDA and £450 million of total transaction value (TTV) during FY26.
Owning Iglu will mean the ASX share’s cruise-related TTV will almost double to surpass an annualised $2 billion, two years ahead of plan.
How much will this cost?
Flight Centre revealed that the cost of this acquisition is £100 million upfront, with up to £27 million in performance-based payments.
The company said this is based on a £122 million enterprise value, which is 7.25x FY26’s forecast pro-forma (company-calculated) EBITDA including synergies.
Flight Centre expects this acquisition will deliver immediate benefits for shareholders, with it expected to add to earnings per share (EPS) in FY26, with strong growth potential and further synergies available in the medium-term.
Increased guidance
Flight Centre has upgraded its FY26 guidance thanks to its acquisition.
Underlying profit before tax (UPBT) is now expected to be between $315 million to $350 million, up from the previous guidance range of $305 million to $340 million.
The mid-point of that guidance range reflects 15% year on year growth.
Flight Centre said it will continue its share buyback of up to $200 million – it has used almost $110 million to date.
Final thoughts on the Flight Centre share price
Investors are clearly excited by the move and, with such strong organic growth, it appears to have a good future.
Ultimately, investors want to see profit (growth) and Flight Centre’s financials will get a boost from this move.
If profit can continue growing for the overall ASX share, it could still be undervalued, though it’s not the sort of business I want to invest in for my own portfolio. There are other ASX growth shares I’d buy first.
