Webjet’s share price is trading lower today after the company announcing a weak first-half result, with Webjet reporting heavy falls across its key business due to the government’s COVID-19 travel restrictions.
For the six months ending December 31, Webjet total transactions were valued at $267 million, down 89% over the prior corresponding period, with revenue plummeting to $22.6 million, dropping around 90% over the same time last year, with WebBeds business crashing from $127.5 million in the same period last year to $8 million this year.
Webjet says that ongoing travel restrictions and lockdowns impacted bookings in all of its regions, with the company noting that it is in the process of executing a transformation strategy that will see a 20% improvement in costs when at scale.
Expenses for the period were driven lower as a result of management’s focus on cash burn and cost reduction initiatives, with expenses of $62.7 million, a 52% drop on last year.
EBITDA was sharply down, with the company reporting a $40.1 million loss, a huge 146% plunge when matching against H1 FY20’s result.
The report does say though that at the end of December, the company recorded a strong cash position of $283 million to withstand prolonged periods of recovery, contrasting with the company’s monthly cash burn rate of $4.8 million per month, giving Webjet enough breathing space to run operations for the next 5 years without raising additional funds or drawing down on debt.
Accordingly and no surprisingly, the Board has not declared an interim dividend due to the uncertain travel environment and also FY20’s interim dividend payment id deferred.
Webjet Managing Director, John Guscic said, “These results reflect the devastating impact COVID-19 continues to have on the global travel industry”, adding, “We remain focused on maintaining our strong capital position”, and “Cost savings initiated across all businesses helped reduce cash burn, while allowing us to return staff to full time work.
He added, “The demand for travel and in particular leisure travel remains high”, and “We believe people will want to travel as soon as they are able to and we are doing everything we can to ensure Webjet is there to capture demand when it happens”, adding, We are hopeful that global vaccine rollouts will enable travel to return to historical levels and our strong capital position provides flexibility to weather any protracted market recovery.”
A report by John Alwyn-Jones
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