The share price in Flight Centre Travel Group Ltd (ASX:FLT) was sent plummeting today down 13% at one point on its now regular profit downgrades.
This is how Flight Centre announced the bad news to market.
fliught
So why has this downgrade happened again? Here are the reasons Flight Centre put forward.
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If you’re a long term Flight Centre share holder the reasons will sound very familiar. Airline price wars have seen Flight Centre’s profits continue to fall over the last couple of years.
While I believe all of the reasons are valid and do not reflect a problem with Flight Centre’s underlying business I do not see an end in site to their problems in the foreseeable future.
Unless we see a reduction in the number of airlines competing for market share low cost fares are here to stay at least for a while.
I note with interest that Webjet Limited (ASX:WEB) has also fallen in rice over the last week or so but in my opinion it relies on a different revenue model to Flight Centre and as such would be my preference in this space.
Tip for New Investors
Do not be afraid to admit your mistakes. Learn from them and write down each lesson so you can refer to them like a check list when you start assessing a new company for investment.
Disclosure:
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.