Australia-based Flight Centre Travel Group posted a statutory loss of AU$849 million (US$625 million) for its 2020 fiscal year, the 12 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-19 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 12-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,” said 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, said it has a strategy to increase its share of that market by capitalising 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 said.
“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,” said Flight Centre Travel Group global managing director and CEO Graham Turner.
“Although our short-term objectives have generally been realised, we just don’t understand and know the exact the time frames around government restrictions being lifted.
The original version of this article was first published in PhocusWire.