Flight Centre trims FY26 guidance on Middle East disruption

About Flight Centre Travel Group Limited

Flight Centre Travel Group Limited (ASX: FLT) is one of the world’s largest travel agency groups, headquartered in Brisbane and operating across leisure and corporate travel in markets spanning Australia, the Americas, Europe, the Middle East, Africa and Asia. Its leisure brands include Flight Centre, while its corporate arm operates through FCM and Corporate Traveller.

Revised FY26 guidance

FLT now expects FY26 UPBT of $275m–$295m for the year to 30 June, down from its previous target of $310m–$345m, which had been adjusted to reflect the sale of the Pedal Group cycle joint venture in May 2026. The new midpoint sits broadly in line with the company’s adjusted FY25 UPBT of $286m.

The company attributed the downgrade to the Middle East war’s significant short-term effect on international leisure travel rather than any underlying deterioration. Strong corporate profit growth across the year is now likely to be offset by lower-than-expected leisure profit and higher Global HQ division losses, the latter relating predominantly to a previously announced net interest decline and a roughly $5m impact on the UK-based touring businesses from Middle East-related cancellations. Group-wide, FLT also expects a $5m–$10m adverse profit translation impact from the stronger Australian dollar.

While a Middle East peace agreement reached this week provides a clearer runway into FY27 and a significant earnings tailwind, its timing means it is unlikely to meaningfully alter the fourth-quarter result.

A solid year disrupted late

For most of FY26, FLT was tracking well, recording almost 10% UPBT growth to $227m across the first three quarters. Third-quarter growth accelerated to nearly 20% over the prior year, culminating in a record profit in Australia in March, despite escalating Middle East hostilities.

The disruption concentrated in the fourth quarter. Following a roughly $10m leisure profit reduction in April, trading pointed to a larger year-on-year decline in May, with June, traditionally a stronger leisure month is expected to see a more significant fall given heightened tensions early in the month and the Federal Government’s “Do Not Travel” advisory for key Middle Eastern transit hubs. The company noted that this advisory, Australia’s highest warning level, is a step above comparable countries such as the United Kingdom and impedes recovery by stripping Australians of travel insurance cover for non-war-related issues while merely transiting the region.

Having been tracking towards a $200m UPBT at the end of the third quarter, the leisure business now expects circa $50m of lost fourth-quarter earnings once anticipated growth that will not be realised is factored in.

Shifting travel patterns

FLT identified two temporary shifts behind the leisure shortfall. Travellers with forward bookings to the UK and Europe, its largest and highest-value international destinations  routed via the Middle East typically amended or cancelled plans, while those rerouting via Asia or the Americas often switched to lower-margin carriers. At the same time, a slowdown in longer-haul bookings emerged as ongoing volatility, capacity constraints and higher fuel prices drove airfare spikes. Notably, customer enquiry has remained healthy, up 18% month-to-date in the Flight Centre brand in Australia, but customers have been deferring bookings, a typical response in uncertain times.

Managing director Graham Turner described the change as a temporary, conflict-driven headwind layered over what was shaping as a very solid year, driven by an external shock rather than any deterioration in the underlying business, and reiterated that the $200m leisure profit milestone remains a viable near-term target given travel downturns are historically short and followed by rapid rebounds.

Corporate strength, cost discipline and AI

FLT’s global corporate business has been less affected and remains on track to deliver strong FY26 profit growth, supported by growing operating leverage, new offerings expanding its addressable markets, a stronger US presence via the new Blockskye partnership, and an accelerating contract win pipeline late in FY26. In leisure, the company continues to strengthen the Flight Centre brand, expand in cruise, tour and luxury, and embed its World360 Rewards program, which now has more than 420,000 members.

The group is pursuing short-term savings, including reduced discretionary spend, a freeze on support-role recruitment and prioritised capital expenditure, balanced against continued investment in growth drivers. It is also deploying artificial intelligence and automation group-wide, including the rollout of corporate AI assistants Sam (FCM) and Mel (Corporate Traveller) and the launch of AI-powered search and a forthcoming AI travel assistant in leisure.

The buy-back

FLT will initiate an on-market buy-back of up to $200m, following the completion of a similar program in May 2026 that repurchased 16.2 million shares, or 7.3% of issued capital. Conducted over the next 12 months at the company’s discretion and subject to market conditions, the buy-back will reduce shares on issue, support earnings-per-share growth and offset potential dilution from its convertible notes. FLT noted there is no assurance it will buy back any or all of the contemplated amount, and that it reserves the right to suspend or terminate the program.

Conclusion

The update frames FY26 as a fundamentally strong year disrupted by an external shock in its final quarter, with FLT still expecting an underlying result broadly in line with FY25. With a peace agreement improving the outlook into FY27, a resilient corporate business and a fresh buy-back signalling Board confidence, the company is positioning for recovery, though the pace will depend on how quickly leisure travel patterns normalise and broader conditions evolve.