Bumpy ride: Flight Centre predicted to be tax free for six years

Flight Centre’s fortunes have been hit so badly by the pandemic that it won’t have to pay tax until 2028, according to stockbroker Morgans.

May 09, 2022, updated May 09, 2022
Flight Centre's founders get more freedom to sell their shares (Photo: AAP Image/Glenn Hunt)

Flight Centre's founders get more freedom to sell their shares (Photo: AAP Image/Glenn Hunt)

Morgans analyst Belinda Moore said the Brisbane-head quartered Flight Centre had about $1.2 billion in tax losses accrued that would offset any profits made over the next six years.

The company updated the market last week claiming it was creating positive cash flow, which Moore said was stronger than expected. The company missed market consensus for its profit outlook which was for a loss of as much as $225 million.

The company forecast an overall EBITDA profit for the 5 months to 30 June, with continued recovery in the travel sector expected. This follows on a $184 million EBITDA loss in the first half of the year, which was impacted by the Omicron wave.

Moore said the company’s earnings would not recover until 2024 and there were still risks to its recovery, including a prolonged war in Ukraine or that Flight Centre won’t be able to hire enough staff, or that it will need to pay them more.

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It is currently searching for more than 500 workers.

Teaming up with Goldman Travel Corporation and the Spencer Group of Companies, Flight Centre will have a 60 per cent interest in the new JV called Link Travel Group, an invitation-only members’ group that will work with highly regarded independents in the Australian premium leisure and corporate travel sector.

Flight Centre is one of the most shorted stocks on the ASX because of the slow recovery of the travel sector.


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