Tag: FLT

Macquarie believes a $700m capital raising provides the company with the ability to deal with the travel restrictions. While total transaction value in April was down -95%, an improvement is expected as travel restrictions gradually ease.

Flight Centre has withdrawn FY20 guidance. The broker has revised down forecasts with the caveat of best guess under the circumstances. The broker’s travel sector view is one of depressed conditions throughout the first half FY21 before normalising in FY22.

Credit Suisse observes recent travel data has been weak, consumer sentiment is poor and there is a strong second half skew to guidance.

Macquarie has surveyed 40 travel agents, airlines and hotel operators to gauge recent travel trends. The consensus view is that conditions are subdued for both domestic and international travel. Global political uncertainty and corporates mandating travel freezes of varying degrees are having an impact.

The company has downgraded guidance by -12% to $335-360m for pre-tax profit in FY19. Credit Suisse notes the Australian leisure business continues to be challenged and total transaction value appears to have declined in the first months of 2019.

At the AGM management provided a weak trading update, in Deutsche Bank’s view. First half pre-tax profit is expected to be $140-150m. FY19 underlying pre-tax profit is forecast at $390-420m.

The share price has been on strong uptrend with Citi analysts referencing a positive turn in the industry’s cycle with oil prices having increased by circa 40% over the past 12 months; this is driving up airfares, helping revenue growth for travel agents such as Flight Centre.

Flight Centre has evolved its model from a leisure focus to be 50/50 leisure/corporate, and successfully so, the broker believes. Corporate customers are using the business because it is quicker, cheaper and more efficient.

UBS acknowledges earnings upgrades are needed in order for the stock to outperform ahead of consensus in FY19. The main drivers will be robust travel markets and achieving medium-term targets.

Deutsche Bank observes travel volumes in April slowed after a strong March. While Easter can cloud the numbers the broker does not believe this will have been a factor.

Post the AGM’s guidance for underlying profits before tax to rise by between 6%-19% on the prior year, Citi analysts have added 2% on top of their estimated growth numbers.

Morgan Stanley’s survey suggests that higher mortgage rates will put more pressure on household consumption and encourage borrowers with interest-only loans to switch.

The company has revised underlying FY17 pre-tax profit guidance to $325-330m, highlighting the US and UK businesses are expected to deliver record results.

The company’s share price has risen 25% in the year to date and UBS observes it has outperformed the broader market. This, coupled with a more sombre outlook for the Australian discretionary retail environment, is the main driver of the broker’s downgrade to Neutral from Buy.

Morgan Stanley observes the Australian consumer environment has weakened, yet the market appears more constructive on the company’s earnings outlook.

International departures rose 6.9% in March having risen 7.0% last March. But Easter was in March this year and April last year. The broker estimates a 12-month growth rate of 4.7%.

Morgan Stanley suspects second half guidance is again too bullish. The broker’s data points to an acceleration in international flight price deflation. Analysis of historical seasonality trends also highlights a risk to FY17 profit guidance.