Investors

First Quarter Highlights

• Record first quarter business (TTV and revenue)
• $26.7 million profit before tax - steady with 2003/04
• Improved results in all international markets
• Strong performance from United Kingdom leisure travel operations
• Upstaffing - consultants per shop increased globally from 4.2 to 4.7 in past year

Full Year Outlook

• Too early in year to change guidance of 15% increase in profit before tax

MEDIA RELEASE AND STATEMENT TO ASX - October 28, 2004

RECORD FIRST QUARTER SALES AS Flight Centre BUILDS FOR FUTURE

FLIGHT Centre Limited has recorded strong sales growth in the first quarter of the 2004/05 fiscal year, while continuing to build its business for the future.

The company achieved 20% growth in total transaction value to $1.6 billion during the three months to September 30 2004, a record first quarter result. Profit, both before and after tax, was in line with results from the corresponding quarter of 2003/04 and broadly in line with budget expectations.

This reflects the commitment the company has placed in:

• developing its technology systems
• the launch and development of corporate travel brand FCm Travel Solutions
• increasing advertising and marketing to enhance top of mind brand awareness
• upstaffing in sales areas globally and employment of new staff in eCommerce, technology and strategy
• rebranding Great Holiday Escape stores to Flight Centre in New Zealand

Net profit for the first quarter was also affected by:

• the provision of additional depreciation expenses consistent with the company's increased asset base
• a one-off increase in accounting tax expense related to the conservative writing off of future tax benefits associated with US tax losses

Gross margins decreased slightly compared to the previous September quarter, in an increasingly competitive market characterised by high demand for low yield products.

To improve profit results and margins during 2004/05, Flight Centre Limited will:

• continue to focus on higher margin sales (land strategy)
• continue to enhance productivity in stores and support areas
• continue to reduce overall costs through targeted procurement and a review of expenses globally

Initiatives and projects that will be introduced to improve performance include:

• an airfares database that reduces time and errors by quickly locating and validating available fares. The database has just been introduced in the UK and will be launched in most other markets
• a consultant desktop that will reduce administrative demands on sales staff
• an enhanced online booking system for the flightcentre.com website in Australia and, eventually, other websites overseas
• corporate travel management tools with improved reporting and booking abilities

The company will also reduce administrative demands on selling staff by streamlining in-store finance and client relationship management processes.

"During the first quarter, we have focused on establishing a solid foundation for the full year by investing in the key areas of our business," Flight Centre Limited chairman Norman Fussell said today at the company's Annual General Meeting.

"As part of this investment, during the past three months we have increased selling staff numbers by 5% globally. The benefits will flow through during the year - most significantly in the fourth quarter - as the new projects are launched and the new consultants complete training, gain experience and become more productive.

"Consultants will also benefit from our ongoing focus on IT and productivity enhancements as we continue to streamline sales systems and build a multi channel distribution network."

The company has introduced Sunday trading in Australia to capitalise on customer demand generated by weekend advertising. The number of Flight Centre shops trading will increase in future months.

Operations review

Operational highlights from the first quarter include:

• healthy improvements in all leisure travel operations globally
• strong profit growth in the UK leisure business
• good results from Britannic in a reduced commission environment in the UK
• continued profitable growth in corporate travel in the USA and Canada
• good profit growth in South Africa
• overall results from New Zealand in line with those of 2003/04

Outlook

Flight Centre Limited chief executive officer Shane Flynn said the company had:

made significant progress during the first quarter in implementing its global strategies of:

• enhancing productivity
• increasing land-based business
• growth through upstaffing and shop openings
• developing the corporate travel business
• enhancing supplier relationships

"At this early stage, we see no reason to vary our full year guidance of 15% growth in profit before tax," Mr Flynn said. "The second quarter is likely to follow a similar pattern to the first, with renewed profit growth expected in the second half as benefits from our principal global strategies for the year flow through.

"We maintain a strong balance sheet to take advantage of strategic acquisition opportunities globally."

Flight Centre Limited shareholders registered on November 5 2004 will receive a special dividend payment of 40 cents a share on November 26. In addition, the company's shareholders received dividend payments of 61 cents a share for the full year (2003/04).

ENDS Media enquiries to Shane Flynn 0439 710023, Jim Sturgess (CFO) 0402 890654 or Norman Fussell 0419 772063