Flight Centre impacted by airline commission cuts

Flight Centre has conceded that its revenue margin for the four months to 31 October has been adversely impacted by reduced front-end commission payments from select airlines in Australia and New Zealand.

SPEAKING about the company’s latest financial results released this week, Flight Centre MD Graham Turner said he anticipates the changes in commissions will adversely affect overall leisure revenue margins by around 1% in Australia.

“We are partially offsetting the impact through a combination of revenue margin improvement strategies and by securing better arrangements with those carriers who are keen to work closely with us during the recovery phase,” he reassured stakeholders.

Higher airfares are also eating into Flight Centre’s revenue margins, the company’s latest financial report revealed, especially its FCM brand which relies more heavily than most on a fixed fees model.

Despite the challenges, Flight Centre has been able to post some encouraging financial results for the four months to 31 October, headlined by a significant swing to EBITDA profitability of $61 million, up from a $137 million loss posted in the previous corresponding period.

Flight Centre also managed to grow its Total Transaction Value (TTV) to $6.8 billion during the period, an increase of 246%, while revenue saw a similar boost, increasing by 248% to $667 million.

The leisure arm of the business alone increased six-fold to $3 billion, delivering an underlying EBITDA profit of $23 million, while Flight Centres’ premium Travel Associates brand was singled out for doing particularly well, matching pre- COVID TTV in September and utilising only 60% of its sales network to achieve the outcome.

Further highlights from the report saw the announcement that long-standing executive and current Supply CEO Melanie Waters-Ryan will step down from her role on 01 July 2023, citing the need to take a well-earned break after 35 years with the business.

“Mel has been a wonderful asset to our company, a role model, and an inspiration to our people and will be sorely missed,” Chairman Gary Smith gushed during his address.

No replacement has yet been named for Waters-Ryan.

Meanwhile the company’s Travel Money arm has finally exited hibernation and according to the report now plans to open a 65-shop network in Australia.

Interestingly, the current Group General Manager – Travel Money Group, Scott McCullough, has been quietly brought back into the business as of September, only 14 months after departing the business in 2021.

In June last year, Flight Centre confirmed Dan Thorne had been appointed the new General Manager of its hibernated Travel Money Group division to replace McCullough, however, Thorne departed Flight Centre in October to purse a General Manager role with Discover Waitomo in New Zealand.

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