Flight Centre now expects lower earnings after selling its stake in Pedal Group, with that business forecast to deliver about $5 million in underlying profit before tax in FY26. The downgrade adds to a previously disclosed shock to its fourth-quarter performance, driven by ongoing conflict in the Middle East through May.
Management says the disruption is feeding directly into its leisure division, which is more sensitive to traveller sentiment. Profit in April alone took an estimated $10 million hit as bookings wobbled.
Geopolitical volatility is reshaping the usual pattern in which leisure demand firms in May and June by triggering more refunds and thinning out forward bookings. Refunds are climbing as cautious customers unwind plans, leaving fewer locked-in trips on the books.
The company is losing both immediate revenue and visibility over future travel flows, which complicates planning for capacity and costs. Pedal Group’s more modest profit contribution adds another drag when set against these softer leisure trends.
Corporate travel, a crucial pillar for Flight Centre, is holding up better than the holiday segment for now and has not seen the same sharp disruption.
Executives are bracing for pressure on this side of the business in early FY27, pointing to higher airfare pricing as a likely headwind. Rising ticket costs tend to push corporate clients to trim travel budgets or downgrade itineraries, which can squeeze margins even if trip volumes stay relatively steady.
Flight Centre’s outlook hinges on whether geopolitical risks ease and airfares stabilise before those corporate pressures fully materialise.
