Flight Centre (FLT) was in the news for the wrong reasons on Wednesday although it wasn’t all bad. They downgraded FY26 earnings guidance after the recent US-Iran conflict disrupted its fourth-quarter leisure travel business, with cancellations, booking delays, weaker long-haul demand and a shift towards lower-margin routes contributing to an estimated $50 million earnings impact. The company also flagged a further $10 million headwind from adverse foreign exchange movements.
Despite the weaker near-term outlook, management announced an on-market share buyback of up to $200 million over the next 12 months and delivered a more upbeat tone on FY27, arguing that the emerging peace agreement and easing travel restrictions across key Middle Eastern transit hubs should provide a clearer runway for growth and potentially deliver a meaningful earnings tailwind. The market appeared to agree, sending the stock more than 5% higher on the day.
At MM, on the surface, we’ve always found FLT’s brick-and-mortar business model slightly “old economy”, but you cannot argue with the numbers, with corporate delivering ~40% of sales, shop-front 40% and online 20%, illustrating that Flight Centre remains predominantly a people-led travel business, unlike Webjet – arguably FLT has the opportunity to beef up its online market share.
- We can see FLT’s next 10-20% on the upside, although it’s unlikely to be for MM.
MM is cautiously bullish towards FLT around $12
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