👉 Background: Flight Centre is Australia’s biggest listed travel agency founded in 1982. It's known for its "mascot" pilot and highly annoying, highly effective jingle “Lowest airfares guaaaranteeeeeeeed”. But, lowest airfares or not, Flight Centre has copped a heck of a beating.

‍👉 What happened: Flight Centre has officially ditched its profit guidance that it previously shared with the market. While it was expected to forecast a profit between $365 - $405 million, but now they’re saying it could be up to $100 million less than that. A big part of this drop is because travellers from Australia, the UK and Europe are getting spooked about travelling to the US. In fact, March saw a 7% drop in Australian visitors to the US — the worst since the pandemic.

‍👉 What else: Despite the grim update for US travel, Flight Centre reckons transaction volumes overall will hit record highs this year. And they’re also looking to offload some non-core assets to tidy things up a bit.

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‍What's the key learning?

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‍💡When times get tough, companies sometimes turn to selling off these non-core assets which are parts of the company that are not essential to its main mission. It could be poorly performing business or maybe office property or sometimes even investments that no longer fit the bigger strategy anymore.

💡Selling non-core assets helps companies free up cash or pay down debt, but it also sends a message that they’re going to focus their energy on the most profitable areas of the business. For Flight Centre, selling non-core assets is a way to manage the US travel slowdown without slashing its core business or disappointing shareholders.

💡Flight Centre isn’t the first travel business to do a cheeky cash grab during tough times. During COVID, Qantas sold land near Sydney Airport since they wanted cash in their coffers while flights were grounded and pocketed $802 million. And, despite the disappointing news, the cost cutting and sell-off of non core-assets actually saw Flight Centre’s share price jump!