An Australian-based global travel leader hopes to get an earnings tailwind from a peace deal between the US and Iran, as the nation's travel advice for the Middle East was raised.
The developments are a positive sign for Flight Centre Travel Group, which on Wednesday downgraded its earnings for the current financial year due to the conflict.
The company, which operates in Australia, New Zealand, South Africa, Canada and the UK, now expects an underlying profit before tax between $275 million and $295 million for 2025/26.
It had previously forecast an underlying result between $310 million and $345 million, against the prior year's $286 million result.
"It has been driven by an external shock - the Middle East conflict disrupting peak leisure travel - not by a deterioration in our underlying business," managing director Graham Turner told investors in a statement.
After the US began its attack on Iran in late February, the Australian government issued a 'do not travel' warning for the region.
The advice dampened Australian demand for travel to the Middle East and to regional hubs normally served by some international carriers as jumping-off points to destinations in Europe.
The government has now raised its advice to 'reconsider your need to travel' for Bahrain, Israel, Kuwait, Qatar and the United Arab Emirates, as the prospect of a peace deal narrowed.
"Reconsider your need to travel also means 'reconsider your need to transit'," the government said.
"If you need to transit these locations, stay as short a time as possible and eliminate unnecessary activities."
RBC Capital analyst Wei-Weng Chen said Flight Centre's earnings downgrade wasn't completely out of the blue.
"The downgrade is largely historical, while on a forward-looking basis two key positives have emerged ... a peace agreement between the US and Iran and the downgrading of travel restrictions for travel into and through the Middle East," he said.
Do not travel advice remains in place for Iran and Lebanon.
Flight Centre said the conflict mostly affected its fourth-quarter leisure travel market, with earnings expected to fall by about $50 million.
It cited cancellations and booking deferrals, weaker long-haul bookings and a shift to lower-margin routes.
"Even after absorbing Q4 disruption, the group still expects an underlying profit broadly in line with FY25," Mr Turner said.
Flight Centre said the new peace deal between the US and Iran would give it a clearer runway into 2026/27 and a "significant earnings tailwind".
Flight Centre also announced an up to $200 million on-market share buyback, after its last one was completed in May.
Mr Turner said the buyback reflectsed the company's view that its shares, which rose 4.7 per cent to $12.37 in afternoon trading, were undervalued.