‘Exacerbated volatile conditions’: Flight Centre downgrades full-year profit forecast amid US tariff chaos

Flight Centre has downgraded its full-year profit guidance, saying US President Donald Trump’s tariff chaos has “exacerbated the volatile trading conditions”.

Shares in the Brisbane-headquartered travel agent fell to a low of $11.94 in early trade on Monday after it revised its profit guidance from between $365 million to $405m, to a range of $300m and $335m.

Shares later recovered and closed up one per cent to $12.59.

In an update to the Australian Securities Exchange, Flight Centre pointed to “recent US developments” that have led to lower-than-expected total transaction value growth in core brands, impacting overall margins.

“Second quarter earnings momentum reported at the half year flowed through to early 3Q results before US policy changes began to impact business and consumer confidence and corporate and leisure sales in March,” it said.

The company announced several measures were being implemented to address “short-term results volatility, under-performing businesses” like StudentUniverse — a travel booking service for students and young adults — and its Canadian leisure division.

These included cutting its full-time employees by 5 per cent, predominantly in non-customer-facing areas, a recruitment freeze in other businesses, a 15 to 20 per cent capital expenditure reduction, as well as temporary airline capacity shifts away from US destinations.

Flight Centre is currently reviewing StudentUniverse, which is trading below pre-pandemic levels and expected to lose up to $10m in the 2025 financial year. The company was initially expecting a result close to breakeven.

Within the loss-making Canadian business, Flight Centre said it was investigating expansion opportunities in the independent agency and agent sector, a category with strong growth potential.

“Stronger overall results are expected in FY26 and beyond as trading conditions stabilise and as the strategies that are already in place gain momentum,” Flight Centre said.

Flight Centre at the same time also announced an on-market share buyback of up to $200m. Part of its capital management policy, the buyback is set to begin early next month and be completed within 12 months.

“While FY25 has been a turbulent year, our fundamentals are strong and we are well placed to deliver more rapid growth and enhanced shareholder returns next year and into the future as the trading cycle stabilises,” managing director Graham Turner said.

“Group-wide, we are maintaining cost discipline and implementing strategies to boost productivity and enhance the customer experience.

“The $200m buyback we have just announced underlines both our belief in the strength of our business and our commitment to enhancing shareholder returns.”

Flight Centre said while it would not achieve its initial full-year profit target, it continued to generate solid monthly profits and maintain a strong balance sheet and liquidity position with increasing cash reserves.