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Double-edged sword: Flight Centre smashed as Eagers counts the cash

The fortunes of the pandemic played out today with two Brisbane companies showing completely different profit outcomes: Flight Centre reporting another huge loss and Eagers Automotive posting a 1700 per cent improvement in for its half-year.

Aug 26, 2021, updated Aug 26, 2021
Flight Centre boss Graham "Scroo'' Turner (Image: Australian Institute of 
Business).

Flight Centre boss Graham "Scroo'' Turner (Image: Australian Institute of Business).

Flight Centre has been one of the bigger corporate victims of the pandemic but after delivering the bad news for shareholders of another $433 million loss, the company predicted a return to monthly profit next year as strength returned to the European and US markets.

Flight Centre expected it would return to pre-COVID levels of TTV (total transaction value) in 2024. By then the pandemic would have slashed four years of revenue.

But Flight Centre pain is Eagers’ gain. The auto retailer has benefitted from people using money they normally would have spent on travel and the result was a profit for its half year of $202 million. It will pay out a 20 cents a share dividend plus a special dividend of 8 cents a share.

Eagers said the car market had changed dramatically. Used car values had climbed 34 per cent which meant that people were more willing to change vehicles. Its new car sales division reported an underlying profit of $211 million compared with $38.6 million for the corresponding period.

But Flight Centre is readying for its own resurgence as travel returns and it reported improvements in its full year with particularly strong recovery occurring in the US where its business is profitable.

“Various other leisure and corporate businesses have returned to modest profit or approached breakeven in specific months during the second half,” it said.

Chief executive Graham “Scroo” Turner said the past 18 months had meant the organisation had learnt a lot about being resilient, consistent and optimistic as possible.

The new world of travel would also benefit for the company.

“Travel will inevitably be more complex in the post-COVID world and customers will require more assistance as they navigate new requirements and try to understand any restrictions that may apply,” he said.

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“Our priorities have evolved from emergency cost cutting at the beginning of the crisis to maintaining those significantly reduced expenses, while still developing and implementing our technology, improving productivity and finetuning our recovery strategies to drive stronger future returns.”

Flight Centre also cited data from the US showing there was excess savings of $4.5 trillion while in Australia a survey done by the company found two-thirds of people would travel within six months travel restarting and a quarter would travel within a month.

It expects it will be profitable at far lower levels of revenue because of its cost savings, however it said some business travel was lost forever because of the practical benefits found in things like Zoom meetings.

 

 

 

 

 

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