Flight Centre Lowers FY26 Profit Forecast to $275m-$295m

Middle East Conflict Forces Flight Centre to Lower FY26 Profit Forecast

Flight Centre Travel Group (ASX:FLT) has slashed its full-year profit guidance to between $275 million and $295 million underlying profit before tax (UPBT), down from a previous $310 million to $345 million range. The revision stems from a sharp $50 million hit to Q4 leisure earnings caused by the ongoing Middle East conflict, which disrupted peak international travel bookings and forced cancellations.

Despite this, the revised midpoint aligns closely with the $286 million UPBT recorded in FY25, underscoring that the downgrade reflects a temporary external shock rather than a fundamental business decline. The company reported nearly 10% UPBT growth across the first three quarters of FY26, accelerating to approximately 20% in Q3, including a record profit in Australia in March.

Leisure Travel Disrupted While Corporate Business Holds Firm

The leisure segment bore the brunt of the disruption, with a further $5 million impact on the UK-based touring businesses due to Middle East-related cancellations. Additionally, a $5 million to $10 million adverse foreign exchange translation effect from a stronger Australian dollar weighed on group profits. The corporate travel division, by contrast, remains resilient and is on track for strong profit growth, supported by expanding offerings and a growing US presence through the Blockskye partnership.

Flight Centre’s managing director Graham Turner emphasised that the short-term headwinds are externally driven, stating, "It has been driven by an external shock – the Middle East conflict disrupting peak leisure travel – not by a deterioration in our underlying business." He highlighted the company’s solid foundations and growth prospects across both leisure and corporate sectors.

$200 Million Share Buy-Back Signals Confidence Amid Uncertainty

In a clear vote of confidence, Flight Centre announced an additional on-market share buy-back program of up to $200 million, following a successful $200 million buy-back completed in May 2026 that retired 7.3% of issued capital. This move aims to capitalise on perceived undervaluation and support earnings per share growth, while offsetting dilution from outstanding convertible notes.

The buy-back will be executed opportunistically over the next 12 months, subject to market conditions and share price, with no guarantee the full amount will be repurchased. It reflects the board’s belief that the travel sector’s historic resilience will drive a rapid rebound once geopolitical tensions ease.

Technology and Cost Discipline Underpin Recovery Strategy

Flight Centre continues to balance cost discipline with strategic investment. Short-term savings include freezing recruitment in support roles and cutting discretionary spend, while maintaining investment in network growth, marketing, and new customer offerings.

Artificial intelligence (AI) plays a growing role in Flight Centre’s productivity and customer experience enhancements. Recent initiatives include rolling out AI-powered corporate assistants and launching Google Agent Search for leisure customers, alongside plans for an AI Travel Assistant to provide proactive trip information.

Peace Deal Offers Hope but Limited FY26 Impact

The recent Middle East peace agreement offers a clearer pathway into FY27 and is expected to provide a significant earnings tailwind. However, its timing means it is unlikely to materially improve Flight Centre’s Q4 or FY26 results. The Australian Government’s ongoing highest-level travel advisory for key Middle Eastern transit hubs continues to hamper recovery by limiting travel insurance coverage, further suppressing bookings.

Looking ahead, Flight Centre remains focused on expanding growth sectors such as cruise, luxury, and tours, supported by its World360 Rewards program, which now counts over 420,000 members. The company maintains a near-term $200 million profit target for leisure travel, betting on a swift rebound following the current geopolitical disruption.