Flight Centre's Cruise Deal Meets a Middle East Travel Disruption

A transformational UK cruise acquisition and a competitor's troubles drove early gains, before Middle East conflict forced repeated leisure earnings downgrades.

31 Aug 2026 · 4 min read

Flight Centre Travel Group rallied on a transformational Iglu cruise acquisition and a competitor's accounting troubles at Corporate Travel Management, before Middle East conflict disruption to leisure travel forced a series of earnings downgrades through mid-2026, cutting FY26 profit guidance by around 11 percent even as the Corporate travel division kept outperforming.

A transformational cruise acquisition lifts the stock

Wilson Asset Management said Flight Centre agreed to acquire Iglu, the UK's leading cruise travel agency, for up to £127 million, around A$255 million, with around £100 million paid upfront and the remainder tied to performance, a business specialising in cruises, around 90 percent of its activity, and ski holidays, holding more than 15 percent of the UK cruise market. Tamim Funds Management called it a transformational UK cruise sector acquisition, materially expanding Flight Centre's cruise footprint and digital platform capabilities. L1 Capital said its long position rallied 30 percent on the earnings-accretive deal, also benefiting from issues at key competitor Corporate Travel Management, where accounting irregularities could necessitate customer refunds in certain markets. Contact Asset Management said Flight Centre upgraded FY26 guidance alongside the acquisition, an important turnaround following challenging operating conditions the prior year, seeing scope for further margin expansion that would materially rerate the stock, with December closing up 11 percent. Ten Cap said it continued building its position on strengthening fundamentals, with Asia returning to profitability and the likelihood of material market share gains in corporate travel, viewing 12 times earnings alongside significant EPS growth as a compelling investment opportunity.

Flight Centre shares rallied as it announced the earnings-accretive acquisition of Iglu, a leading U.K. online cruise agency. The company also benefitted from issues at a key competitor (Corporate Travel Management) where accounting irregularities could necessitate customer refunds in certain markets.

— L1 Capital, Quarterly Report, December 2025

Middle East conflict forces a series of downgrades

Pendal Group said a third-quarter FY26 trading update matched previously provided guidance, but focus had shifted to the fourth quarter and the extent of Middle East conflict impact, with management reiterating FY26 guidance heavily caveated, as April was hit by around $10 million in refunds and softer volumes. By June, Pendal said Flight Centre's trading update removed reference to prior guidance of $315 million to $350 million in underlying profit before tax, with performance through May continuing to be affected, and while the stock screens inexpensive at under 10 times earnings, Pendal wanted more evidence of a turnaround before becoming more positive. Pendal separately said earnings were downgraded around 11 percent versus prior guidance, largely anticipated given ongoing Middle East travel disruption, with the key driver a $50 million to $60 million hit to fourth-quarter leisure earnings from cancellations, rerouting and weaker forward bookings, alongside modest FX headwinds, while Corporate travel continued to outperform on contract wins and competitor disruption. Selector Funds Management said Flight Centre revised FY26 underlying profit before tax guidance from $310 million to $345 million down to $275 million to $295 million to reflect temporary Middle East headwinds, broadly in line at the midpoint with the $286 million underlying profit reported in FY25, with the deterioration concentrated in the final quarter's peak sales period for Leisure.

The key driver was a ~$50-60 million hit to 4Q26 leisure earnings from cancellations, rerouting and weaker forward bookings, alongside modest FX headwinds. Corporate travel continues to outperform, supported by contract wins and competitor disruption.

— Pendal Group, Newsletter, June 2026

Earnings quality questions, then signs of recovery

Seneca Financial Solutions' Richards said Flight Centre excludes technology, HR-transformation and loyalty-program build costs from its underlying earnings, even though he views a meaningful portion of that spend as resembling the ordinary ongoing cost of running a travel business. Pendal Group said the stock fell 4.2 percent after an FY26 result at the lower end of guidance, around 2 to 3 percent below consensus, reflecting the roughly $60 million Middle East disruption impact on Leisure, though supported by stronger than expected Corporate earnings and a better than expected dividend, with July trading pointing to a recovery in Leisure through record total transaction volume.

What fund managers say they are watching next is whether the Leisure division's July recovery in total transaction volume continues, resolution of lingering Middle East-linked travel disruption, continued Corporate division outperformance from contract wins and competitor disruption, and resolution of the earnings quality question Seneca raises about excluded transformation costs.