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Flight Centre has posted a handsome profit for full-year 2018 – and other travel companies, including Helloworld and Webjet, have done likewise – although in Flight Centre’s case its shares fell last week despite the excellent result.

Flight Centre posted a 14.5% increase in net profit after tax to AUD 264.21 million, wth total transaction value reaching a record AUD 21.8 billion, up 8.5%.

Despite the release of those figures on Thursday, the group’s share price fell. Flight Centre was hit last week by controversy involving allegations of underpaying agents and price mark-ups at the discretion of consultants. Some former employees found working at the company like being in a cult, according to a report by ABC Investigations.

Managing director Graham Turner has hit back at those allegations. According to an account in the Australian Financial Review, Turner claimed the ABC was colluding with the Australian Services Union, which is trying to involve itself in what would be Flight Centre’s first ever enterprise bargaining agreement (EBA). Both the ASU and the ABC deny suggestions of collusion in regard to the program, the Financial Review reported.

FLIGHT CENTRE TRAVEL GROUP is Australia’s biggest travel agent and one of the world’s largest travel agency groups. Consistently profitable, it is an unfailing supporter of the bricks-and-mortar agency model and a huge employer of travel consultants.

Flight Centre’s company-owned operations span 23 countries and its corporate travel management network covers more than 90 countries. Flight Centre Travel Group employs more than 19,000 people globally – many of them travel consultants – and it has a total of almost 2800 businesses.

Turner said the latest financial results highlighted the strength of the company’s business model, its ongoing relevance to customers worldwide and its increasing diversity.

The latest results show new sales milestones established in all countries and a AUD 151 million profit contribution from businesses in North America, Europe, Middle East and Africa.

The group expects further profit and TTV growth during FY19 and will provide more specific market guidance at its Annual General Meeting in October.

Turner said factors expected to help drive FY19 results include:

  • Ongoing market growth – the travel sector is expected to grow at a 3.6% compounding annual growth rate globally through to 2036 (Source: IATA);
  • Positive momentum, with the company tracking above the prior corresponding period in early FY19 trading;
  • Further cost, efficiency and revenue benefits flowing from the BT program; and
  • Continued strong contributions from the overseas businesses, particularly in the corporate travel sector.

In Australia, the company expects to surpass its FY18 achievements, off the back of ongoing corporate travel growth and improved leisure travel results.

It expects leisure improvement in Australia to be driven by:

  • Productivity growth, now that the GDS migration is complete;
  • Improved conversion rates through new sales operations, technology, automation and marketing initiatives;
  • People growth, as the company again focuses on recruitment and retention; and
  • Better network returns now that poorly located shops have been closed and a new growth plan is in place to ensure the right shops are in the right A-grade locations.

Average international airfare prices are at or around prior year levels, which means travellers continue to enjoy the benefits flowing from the unprecedented discounting that took place during FY17.

At this stage, FLT expects modest fare movements this year – normal annual fluctuations – although rising oil prices could fuel more significant medium-term price growth, Turner said.

“Within FLT’s businesses, the company sees improvement and growth opportunities across its three core sectors and is tailoring strategies accordingly.”

Apart from Flight Centre, other prominent Australian travel companies have fared well recently.

These include HELLOWORLD TRAVEL LIMITED, which has posted an excellent full-year 2018 result.

Helloworld highlights for the year ended 30 June 2018:

  • Total Transaction Value (TTV) growth of 3.5% to AUD 6.1 billion, underpinned by strong air ticket sales volume growth.
  • Revenue levels maintained despite the impact of lower airfares.
  • Profit after tax of AUD 32 million, an increase of AUD 10.4 million (48.1%) compared with the prior year.
  • Earnings before interest expense, tax, depreciation and amortisation (EBITDA) of AUD 65.2 million, an increase of AUD 10.0 million (18.2%) compared with the prior year.

Key Helloworld highlights include:

  • Focus on profitable revenue streams and the continued management of the cost base through productivity initiatives delivering better outcomes for shareholders, agency members and personnel.
  • Strengthening of the retail network, with retail member numbers growing by 208 (10.3%) to 2,223 members as at 30 June 2018.
  • Re-brand to Helloworld Travel successfully rolled out with improving brand awareness.
  • Increasing investment in technology solutions including key upgrades to ReadyRooms and ResWorld platforms, enhancing our leisure and corporate customer travel solutions.
  • Business acquisitions of the Magellan Travel Group, Flight Systems and Asia Escape Holidays were completed, complementing our existing businesses and expanding our future product offerings.

MEANWHILE, leading Australian online travel agency WEBJET revealed a full-year underlying profit of AUD 43.2 million. Webjet’s revenue rose by 54% to $291 million, while its total transaction value rose to AUD 3 billion. Shares in Webjet leapt by 18% on 23 August after the news.

Managing director John Gusic said the AUD 165 million purchase of JacTravel had enabled Webjet to become the world’s second-biggest wholesaler of online hotel inventory.

Written by Peter Needham