Australian Travel Leader Eyes Earnings Boost from US-Iran Peace Deal
An Australian-based global travel leader is optimistic about receiving a financial boost from a potential peace deal between the United States and Iran. This development comes as the nation’s travel advice for the Middle East has been updated, signaling a shift in the region’s stability.
Flight Centre Travel Group, which operates across Australia, New Zealand, South Africa, Canada, and the UK, recently downgraded its earnings forecast for the current financial year due to the ongoing conflict in the Middle East. The company now anticipates an underlying profit before tax of between $275 million and $295 million for the 2025/26 fiscal year. This is a decrease from its previous forecast of $310 million to $345 million, compared to the prior year’s result of $286 million.
Graham Turner, the managing director of Flight Centre, explained that the earnings downgrade was driven by an external shock—the Middle East conflict disrupting peak leisure travel—not by any internal issues within the business. He emphasized that the company’s core operations remain strong.
Following the U.S. attack on Iran in late February, the Australian government issued a ‘do not travel’ warning for the region. This advisory significantly reduced demand for travel to the Middle East and to regional hubs that serve as gateways to European destinations. However, the government has since raised its travel advice to ‘reconsider your need to travel’ for several countries, including Bahrain, Israel, Kuwait, Qatar, and the United Arab Emirates. This change reflects the narrowing prospects of a peace deal.
The updated guidance also includes a note that travelers should reconsider their need to transit through these locations. If transit is necessary, individuals are advised to stay as short a time as possible and avoid unnecessary activities.
Wei-Weng Chen, an analyst at RBC Capital, noted that Flight Centre’s earnings downgrade was not entirely unexpected. He pointed out that while the downgrade is largely historical, two key positives have emerged on a forward-looking basis: a potential peace agreement between the U.S. and Iran, and the reduction of travel restrictions for travel into and through the Middle East.
Despite these positive developments, the ‘do not travel’ advice remains in place for Iran and Lebanon. Flight Centre reported that the conflict primarily affected its fourth-quarter leisure travel market, with earnings expected to decline by approximately $50 million. The company cited factors such as cancellations, booking deferrals, weaker long-haul bookings, and a shift to lower-margin routes.
Even after accounting for the disruptions in the fourth quarter, Flight Centre still expects an underlying profit that aligns with the 2025 fiscal year. Mr. Turner emphasized this outlook, highlighting the company’s resilience despite the challenges.
The new peace deal between the U.S. and Iran is expected to provide Flight Centre with a clearer path into the 2026/27 financial year, offering a “significant earnings tailwind.” In addition, the company announced an up to $200 million on-market share buyback, following its last one in May. Mr. Turner stated that this move reflects the company’s belief that its shares, which rose 4.7 per cent to $12.37 in afternoon trading, are undervalued.
