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Flight Centre's profits are heading for a record as cruising gains popularity

Joe Raedle/Getty Images

Flight Centre’s profits are rising thanks to cheap airfares and a newfound interest by Australians in ocean and river cruising.

Youth touring and round-the-world flights also helped the travel agency post a 16.3% rise in half year profit to $116.68 million on a 15.1% jump in revenue to $1.269 billion.

Co-founder and managing director Graham Turner says total transaction values grew 7% in Australia, well ahead of the 3.9% growth rate in outbound departures.

The company today reaffirmed its full year guidance of between $380 million to $395 million, a result which would beat the record $376.5 million underlying profit of two years ago.

Turner says the company is seeing volatile conditions in some geographies heading into peak booking months.

“For example, consumer confidence in Australia has not yet recovered from the cyclical downturn late in the 2014 fiscal year and outbound travel from Australia has grown at a slower rate than normal,” he says.

“There have, however, been some positive signs recently with record sales and attendance at the annual Travel Expos that have been held throughout Australia and some of the cheapest fares in recent memory being advertised.”

Flight Centre analysis last month showed that the cheapest advertised return fares from Sydney to ten of the hottest international destinations were on average 14% cheaper than a year ago.

“These ongoing improvements in air fare affordability, coupled with the extensive product related enhancements we are seeing, reinforce our belief that this is a golden era of travel,” he says.

Flight Centre declared a fully franked dividend of 60 cents a share.

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