Travel Rebound Brings sector in Limelight

Post pandemic, Australians’ eagerness to travel has driven strong?demand?rebound for both domestic and international?travel, including enhanced business travel. Australia is also witnessing a strong recovery in inbound arrivals into the country, mainly for leisure. This has led to the continued growth in the number of passengers traveling on airlines in 2024 bringing the entire sector in focus of investors. Two stocks high on their lists are

Flight Centre Travel Group Limited?(ASX: FLT)

Flight Centre Travel Group Limited has demonstrated impressive revenue growth, rising from $1.9 billion in FY20 to $2.71 billion in FY24. The company transformed from an EBITDA loss of $419.9 million in FY20 to a positive EBITDA of $423.2 million in FY24. Additionally, it shifted from a net loss to profitability, reporting a net profit of $139.2 million. Cash flow from operations surged to $421.5 million, and the company achieved net margins of 5.1%, significantly exceeding its target of a 2% margin. With free cash flow of $325.9 million and a return on equity (ROE) of 12%, FLT's operational efficiency is evident. The year-over-year reduction in the debt-to-equity ratio, alongside sales growth, indicates a decreased reliance on debt for expansion.?

For the year ended on 30 June 2024, FLT reported exceptional performance, achieving a record total transaction value (TTV) of $23.74 billion, representing a year-over-year increase of approximately $1.8 billion. Revenue rose from $2.28 billion in FY23 to $2.71 billion, while profit before tax (PBT) soared by 131% to $320 million. Statutory PBT increased by 212% to $219.7 million, and underlying net profit after tax (NPAT) more than doubled to $229.6 million. Notably, the underlying profit margin improved by 72 basis points to 1.35%, driven by revenue margin uplift and stable costs. Additionally, the company reduced its borrowings from $57 million to $11 million and generated robust cash flow from operating activities of $421 million, reinforcing its financial stability and growth trajectory.

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