Flight Centre expects travellers to benefit from improved airline capacity and competition bringing down airfares but remains concerned about an ongoing lack of seats on planes between Australia and Europe.
The travel agency on Wednesday reported a 38 per cent jump in revenue and a 20 per cent lift in total transaction revenue for the first quarter, representing an 11.2 per cent improvement in revenue margin.
The company saw "positive signs in relation to market dynamics" but there was still room for improvement.
"One of the biggest impediments to recovery so far has been the lack of airline capacity and competition," chief executive Graham 'Skroo' Turner told the company's annual general meeting.
"This was particularly relevant with the rejection by the Albanese government of the extra 28 flights that Qatar wanted to bring in.
"This means the government has deliberately tried to keep airfares high.
"We don't know why, but I know in the travel industry the Transport Minister (Catherine) King is now known as the 'minister for higher airfares'."
Mr Turner said conditions were gradually improving but the company was still struggling to find seats for customers, particularly to Europe through the Middle East.
"Qantas, Emirates and Etihad in the UAE are only using about half their allocated seats in Australia, which is obviously again keeping air fares very high," Mr Turner said, with capacity through the Middle East still only about 60 per cent of what is needed.
International Air Transport Association data indicated capacity in Australia had recovered to about 88 per cent at the end of last month, with further growth expected as Singapore Airlines, Emirates, Qantas and Cathay Pacific ramp up services, Mr Turner said.
"We welcome further additions and strongly support the Turkish Airlines application, which is in train at the moment we believe, and obviously Qatar's expansion plans," he said.
The company reported a first quarter underlying profit before tax of $54 million, up from a $12.9 million loss in the prior corresponding period, at an underlying profit margin of just under one per cent.
The improvement across the company's leisure and corporate businesses was driven by strategic pricing initiatives, attachment of higher margin products, ancillary sales and improved supplier margins, Mr Turner said.
Flight Centre expects underlying profit before tax between $270 million and $310 million for the financial year, the midpoint of which is slightly lower than analyst consensus estimates.
RBC Capital Markets analyst Wei-Weng Chen said the trading update was broadly positive, with the growth in revenue margins and cost margins remaining "fairly flat" conducive to the company's target of two per cent underlying profit margin before tax by the 2025 financial year.
Flight Centre Corporate was a stand-out for the group, hitting a record $3.1 billion in total transaction value for the quarter.
Its recovery has outpaced the broader sector, with activity across the global industry reaching 72 per cent of pre-COVID levels, FCM Global chief operating officer Melissa Elf said.
Chairman Gary Smith flagged further exploration of artificial intelligence in the aim of a better customer experience and more sales.
He touted a new Chat-GPT-powered tool which enables customers to automatically generate a list of top 10 activities in cities they are visiting.
Flight Centre shares had dropped 2.8 per cent shortly before noon.
