Brisbane, Australia-based Flight Centre Travel Group posted a statutory loss of AU$849
million for its 2020 fiscal year, the twelve months ending June 30, compared
to a AU$343.5 million profit in the same period a year earlier.
Flight Centre says it achieved AU$150 million profit in
the first eight months of fiscal year 2020 – from July 2019 through February
2020, but the entirety of those profits was erased in March and then the losses
mounted as the COVID-pandemic brought global travel to a halt.
Flight Centre’s total transaction value for fiscal year 2020
was AU$15.3 billion, down 35% from one year prior.
The company says the biggest impact has been in its leisure
business, with minimal new bookings from April through June of this year and
about AU$200 million in revenue write-backs for existing bookings that were
cancelled.
But Flight Centre’s corporate business has fared better,
recording a AU$74 million underlying profit and AU$6.9 billion in total
transaction value during the twelve-month period.
“Our corporate businesses have recorded an underlying profit
for the year with key clients being retained and record amounts of new business
actually being won during these uncertain times,” says Adam Campbell, Flight
Centre Travel Group’s chief financial officer, during a call with analysts to discuss
the financial report.
Flight Centre says part of that success is due to the fact that
about 60% of its corporate business comes from domestic and regional travel and
it has a “solid base of essential service customers” such as government, health/pharma
and mining/resources that have continued to travel despite the pandemic.
While the company predicts the global corporate travel
sector will remain smaller for the foreseeable future, Chris Galanty, CEO for
corporate travel, says it has a strategy to increase its share of that market
by capitalizing on the strengths of its two corporate brands – FCM Travel
Solutions and Corporate Traveler.
“We use FCM to go after and win those large enterprise
customers also large government accounts and regional customers. We then use Corporate
Traveler to win the startups and medium enterprise businesses and bring a
unique product offering to market,” Galanty says.
“That has been the key to our success... having specifically-designed
products and brands for the different parts of the marketplace.”
Earlier this month, Flight Centre
acquired WhereTo, a corporate booking tool that uses artificial
intelligence to make recommendations.
And the company says FCM has
already won AU$390 million in business for fiscal year 2021 and is in talks
with customers valued at AU$750 million that will make decisions in the next
three months.
The company says it has a “healthy
liquidity runway in place” and revenue has been increasing since April, but it
does not rule out the need for further staff reductions – it has already reduced
its workforce by two-thirds - if travel restrictions continue and government
support is removed. The company has also closed more than half of its leisure
stores globally.
“Obviously we don’t know what’s
going to happen in the future,” says Flight Centre Travel Group global managing
director and CEO Graham Turner.
“Although hour short term objectives have generally been
realized, we just don’t understand and know the exact the time frames around government
restrictions being lifted.”