Australia's Flight Centre issues profit warning, blames Brexit poll

By Byron Kaye

SYDNEY (Reuters) - Australia's top listed travel agent Flight Centre Travel Group Ltd (FLT.AX) blamed a global airfare war and upcoming polls in the United States, Britain and at home as it issued a profit warning, sending its shares tumbling.

After telling investors two weeks earlier it expected pre-tax profit to rise up to 8 percent in the year to end-June, the company said on Monday that pre-tax profit would now likely fall up to 5 percent from the previous year's A$366.3 million (182.4 million pounds).

It said that Britain's vote next month on whether to stay in the European Union, along with upcoming general elections in Australia and the United States had dampened business and consumer confidence, crimping demand for travel.

It also said it had been hit as low-cost carriers drive down fares and as fear of the Zika virus cut travel to South America.

While people are travelling in unprecedented numbers, the companies which rely on their business have become more vulnerable than ever to geopolitical pressures.

Australia's two biggest airlines, Qantas Airways Ltd (QAN.AX) and Virgin Australia Holdings Ltd (VAH.AX), have issued similar warnings in recent months, saying election campaigns mean businesses delay non-essential travel until they know the outcome.

"With any election, for whatever silly reason, it seems to dampen consumer confidence," said Flight Centre managing director and 15-percent shareholder Graham Turner on a call with analysts and media.

"It's common knowledge that things just don't fly. If you look at the U.K. with (the) Brexit, certainly the corporates have come off."

Flight Centre made most of its earnings in Australia in 2015, followed by Britain and then the United Sates, according to its annual report.

The company's shares fell 9 percent to A$33.55 on Monday, their biggest one-day drop in 11 months and their lowest close since August.

"Graham's always mentioned elections as a point of hitting on consumer sentiment and affecting his sales," said Shaw Stockbroking analyst Darrin Vincent.

He added that Flight Centre had been spending on upgrades to technology systems, putting the company under pressure to grow revenue and maintain margins.

(Reporting by Byron Kaye; Editing by Christopher Cushing and Joseph Radford)