Flight Centre heads for $1.5b in sales as it buys two New Zealand travel firms

David Coombes, managing director for Flight Centre NZ, pictured outside the travel company's Auckland CBD office. Photo / Peter Meecham.

Flight Centre expects sales will approach $1.5 billion in New Zealand after buying a travel brokers business and corporate travel group.

The company is buying Travel Managers Group (TMG) and Executive Travel Group (ETG), for an undisclosed sum, making New Zealand the Australian firm's fifth biggest business globally.

The two businesses will add $3 million of annual earnings before interest, tax, depreciation and amortisation, and Flight Centre said their addition will boost the New Zealand business to almost $1.5 billion in annual sales in the 2018 financial year.

Flight Centre passed the $1 billion sales mark in this country last year.

The firm's New Zealand managing director Dave Coombes said it was part of a strategy to expand and offer more services to clients.

''The industry is changing and you need to keep ahead of that and think about how we remain relevant and strong. These two partnerships are a really important part of that for us.''

The broking segment of the market was strong in New Zealand. Flight Centre already had 50 brokers, often home-based with long-standing relationships with clients, and the new business would take that number up to 230.

''That's another way customers want to deal with us.''

Executive Travel Group would enhance the corporate travel offering in New Zealand through FCM and will give the business additional scale and expertise.

The corporate travel segment was one of the fastest growing parts of the market, said Coombes.

Executive Travel is New Zealand's biggest independent corporate travel manager.

''Executive Travel is a nice boutique offering that complementary to what we've got.''

Flight Centre last year had turnover of more than $20 billion last year, mainly through its Australian operation.

Former Flight Centre staffer Kevin Weston co-owns ETG, which was set up in 1978 and he and business partner Nicola Jamieson bought a 40 per cent stake in TMG in 2014.

Weston, Jamieson and TMG shareholder David Wallace will keep running the two businesses, and report to Coombes who has been travelling around the country today talking to staff.

Flight Centre will use company cash to pay for the acquisitions, which are expected to settle in the first quarter of the 2018 financial year. The ETG purchase includes extra payments if certain earnings targets are met.

The ASX-listed company's shares last traded at A$43.50 and have jumped 39 per cent so far this year.