Flight Centre Limited is the largest conventional high street Travel Company in the Australian market (Yahoo Finance, 2010). The company’s operations are categorized under the airlines industry and were listed in the Australian Securities Exchange in 2006 under the ticker FTL. The company operates in the international corporate, leisure, and wholesale travel trademarks that comprise the flagship Flight Center trademark. Flight Centre Limited has carried out substantial differentiation for its brands. The company has differentiated its markets into different market segments that comprise of the retail market, wholesale, corporate and the online booking services.
Flight Centre Limited history originates from Top Deck Travel. Flight Centre Limited presence in Australian market can be traced to the launching of London style discount travel center; the center was opened in 1980 in Sydney. Since its listing in the Australian Securities Exchange, the company has expanded through a combination of natural growth and acquisitions. In 2006, Flight Centre Limited launched its operations in North America by acquiring Liberty Travel.
Operations
Flight Centre Limited conducts its business through an association of retail shops and internal dealings. Globally, Flight Centre Limited owns an extensive footprint of stores. This is a valuable distribution network for a travel supplier that operates in airlines, car hire and hotel businesses. This has led to the creation of the company’s brand that is recognized and easily identified internationally. The company’s main operations are centered in Australia, the company’s core market. However, the company has operations in other countries such as the United Kingdom, United States, Canada, United Arab Emirates, New Zealand and South Africa (Yahoo Finance, 2010). Additionally, the company has solidified its operations in the Indian corporate travel agency market and formally took ownership of its Indian corporate travel joint venture. These are among the expansion activities that the company is undertaking in the global market.
Conventionally, Flight Centre Limited has solely competed in the leisure travel market. However, in the years that Flight Centre Limited has been in operation; the company has extended its operations to incorporate academic and business sectors. The company’s activities majorly depend on contracts that have been bargained with other airlines, accommodation and other associated service providers.
Major customers and competitors
Flight Centre Limited operations are specialized in meeting holiday and business requirements of travelers. The company has segmented its customers in various markets: Great Holiday Escape is a cost conscious leisure traveler that is specifically designed for the cost conscious consumer; and the students’ flights segment specializes in the provision of economical air fares to student travelers. Additionally, the company operates the Corporate Travelers division; this caters for the high end corporate travelers. There are various competitors in competing with Flight Centre Limited. These competitors are categorized into two; other airlines services that offer similar products to Flight Centre Limited such as Qants and the travel agencies such as Jetset, Trailfinder and Webjet that make travel arrangements for their clients.
Brands
Flight Centre Limited has incorporated a succession of accommodation and holiday brands. Flight Center is the most popular one stop travel brand for the company while the Flight Center Direct is a complimentary phone and online services that Flight Centre Limited operates in the United Kingdom and Australia. Other holiday brands owned by the company include: Escape Travel, Cruiseabout, Travel Associates, and Shopper Travel. The youthful brands offered by Flight Centre Limited include: Student Flights, Oversees Working Holiday, and Fanatics. Additionally, Flight Centre Limited operates quickbeds.com, an online hotel booking service. Conventionally, the service specialized in the provision of last minute hotel accommodation; however, the service has expanded and now is operational throughout the year in more than 1,400 properties in Australia.
Financial highlights of Flight Centre Limited
Profitability Ratios
Over the last year, though Flight Centre Limited remained profitable, the company’s profitability declined as it is evidenced by all the profitability ratios calculated above. The decline in profitability can be attributed to the global financial crisis that had adverse effects on consumer spending more so in the flight and leisure activities.
Liquidity Ratio
Similar to the profitability for the company, the liquidity ratios declined. The only two profitability ratios that improved were the current ratio and the cash ratio. The improvement of the current ratio can be attributed to the reduction in demand that led to an increase in inventory while the increase in the cash ratio implies that the company increased the amounts of cash and cash equivalents more so to cater for the liquidity emergencies of the crisis. However, the quick ratio which is a better liquidity measure indicates that the company’s liquidity deteriorated over the same period.
Shares as Investment
The shares as an investment for Flight Centre Limited have declined. This is indicative of the markets deteriorating perception on the company’s shares more so due to the declined profitability. However, the dividend yield for the company has improved; however, it is still quite low. This indicates that the market expects the company’s performance to improve in future. According to Digital Look (2010) the company’s shares are currently trading at A$16.270; this provides a holding period return of 22% for the investments in shares of the company. This is a good return considering the hard economic conditions that were prevalent globally due to the global financial crisis.
The management of Flight Centre Limited
The company is compliant with the corporate governance standards; the board of the company appreciates that the main role of the company is to create and safeguard the wealth of the shareholders. The company’s constitution provides that the board can delegate its powers to the managing director of the company; however, the powers can be withdrawn or varied at any particular time. Additionally, the MD and the CFO have the authority to embark on the day to day operations of the company. However, they are expected to act within their mandate and act to achieve the company’s strategic and financial goals.
References
Digital Look. (2010). Flight Centre Limited (FLT). Web.
Yahoo Finance (2010). Flight Centre Limited (FLT.AX). Web.