Flight Centre has provided a glimmer of hope to travellers dismayed by soaring airfares, predicting prices to make a descent over the coming year.
The forecast came as the travel agency on Wednesday delivered its first full-year profit since 2019, finally putting the turbulence of COVID-19 behind it.
Improved market conditions due to the removal of remaining travel restrictions and growth in airline capacity helped the company to a $70.5 million statutory profit for the 12 months to June 30, up from a $377.8 million loss the year before.
Underlying earnings before interest, tax, depreciation and amortisation came in at $301.6 million - a $484.8 million boost.
The result was in line with Flight Centre's updated guidance provided in July, as was total transaction value of $22 billion - a 112 per cent jump from the year before.
"Our $485 million profit turnaround exceeded our initial expectations as our diverse global business benefited from the removal of unprecedented restrictions that were imposed on travellers for some two-and-a-half years and from the strategies that we implemented to preserve our key assets and ensure we re-emerged in a position of strength," founder and managing director Graham Turner said.
He forecast airfares to start decreasing more significantly over the next six months as competition and capacity on international routes increases.
But Mr Turner slammed the federal government's decision to block Qatar Airways and Turkish Airlines from flying additional routes to Australia, potentially preventing cheaper prices, following lobbying by Qantas.
"We certainly didn't agree with the decision and I think the government is going to regret this," he told analysts.
"But by the same token, I'm not sure that they will reverse the decision on Qatar. But I think it augurs well for any other carriers coming into Australia."
Flight Centre continued to reopen hibernated stores and added 2500 staff to match increasing demand, with further recruitment flagged in leisure travel.
Despite increasing cost-of-living pressures, the segment recorded a 162 per cent increase in total transaction value to $10 billion, as unemployment levels remain low globally and holidaymakers exercise pent-up demand.
Flight Centre's customer demographics skew older and wealthier; generally speaking, people who aren't affected by rising mortgage costs and actually benefit from cash rate hikes boosting savings balances.
London remained a stand-out travel destination but consumers are increasingly looking to explore Asian destinations like Japan, Bali and Thailand.
Corporate travel has taken over from leisure to be the group's main revenue driver, with a 96 per cent increase in total transaction value to a record high of $11 billion.
Corporate trading in July was up 20 per cent on the prior year indicating growth continues apace.
Flight Centre announced its first dividend since 2019, with investors set to receive 18c per share fully franked, taking total shareholder returns for the financial year to 10.8 per cent.
The company pledged to allocate 50 to 60 per cent of net profit in financial year 2024 to dividends or share buybacks, given the improvement to cash flow and cash generation.
RBC Markets Capital analyst Wei-Weng Chen said the results were in line with guidance and stamped a neutral sentiment rating on the stock.
Nevertheless, shares in the company plummeted 3.2 per cent to $21.38 before noon.
