Flight Centre had originally predicted last November it would make an underlying profit before tax of between $365 million and $405 million for the 12 months to June 30, guidance it reaffirmed in February.
It cut that to $300 million and $335 million in late April and now says it won't even make that.
The online travel agency said on Thursday it expects to deliver an full-year underlying profit before tax of just $285 million to $295 million, down from the $320 million it made in 2023/24.
The market reacted negatively, with FLT shares dropping 8.1 per cent to a three-month low of $11.83 in early trading.
RBC Capital Markets analyst Wei-Weng Chen said while current softness in the travel market was well-known to investors, it was underscored by 25 per cent difference between Flight Centre's November forecast and its latest profit guidance.
The company blamed the escalating tensions in the Middle East during the June quarter as well as a global downturn in bookings to the United States.
In May, the World Travel & Tourism Council warned that the US was the only one of 184 economies that was seeing international visitor spending decline as the US government put a metaphorical "closed" sign on its borders.
Flight Centre said that Australians were booking closer-to-home overseas travel to destinations such as China, Japan, Fiji and New Zealand, or delaying finalising travel plans entirely.
Leisure bookings by total transaction value are up for the year, but the increase has predominantly been driven by lower margin brands, so profit from leisure travel will be down, Flight Centre said.
Its corporate business division did better, with new account wins offsetting what Flight Centre described as "widespread client downtrading," the practice of consumers buying cheaper alternatives.
Flight Centre also announced Thursday it had signed an agreement with Anthropic to enhance Flight Centre's AI-powered chatbots with Anthropic's "Claude" AI assistant.
The partnership should deliver productivity gains and cost savings across a variety of disciplines, Flight Centre said, adding that it was trialling an AI co-consultant for travel agents in its leisure division.
Flight Centre managing director Graham Turner said that while 2024/25 had proven to be a volatile year for the industry, "with geopolitical unrest and macro-economic concerns slowing the strong post-COVID rebound," he was confident in his company's brand, business portfolio and strong balance sheet.
