How are ASX Travel Stocks FLT, CTD and AQZ Placed Amid Border Closure?

Summary

  • Despite the closure of Australian borders and travel bans, a few Australian companies have started showing signs of recovery.
  • Flight Centre reported record COVID-period sales revenue in March, supported by the Australian corporate & leisure businesses, and US leisure business.
  • Corporate Travel Management broke-even in March and anticipates a positive underlying EBITDA in Q4 FY2021.
  • Alliance Aviation signed a wet lease agreement with Qantas for the provision of E190 capacity.

The Australian travel industry was one of the most severely hit industries by the COVID-19 pandemic. The travel restrictions posed by the Australian government to curb the spread of the deadly virus led to a steep fall in international and domestic flights. The Australian borders are presently closed except those who are granted an individual exemption.

Last week, Mr Dan Tehan, the country’s Trade Minister stated that the borders are not likely to open before H2 2022. Prime Minister Scott Morrison and Treasurer Josh Frydenberg echoed the sentiment, believing the borders might not open this year.

Australian borders likely to remain closed this year (Source: © Belyaaa | Megapixl.com)

In the present situation, it would be interesting to understand where the ASX-listed travel stocks are placed. Some of the stocks in this space include Flight Centre Travel Group Limited (ASX:FLT), Corporate Travel Management (ASX:CTD), Alliance Aviation Services Limited (ASX:AQZ), Webjet (ASX:WEB) and Qantas (ASX:QAN).

In this article, we would look at three stocks – FLT, CTD, and AQZ - from the travel space and cover their recent update.           

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Flight Centre Travel Group Limited

Flight Centre Travel Group Limited, a travel retailer in holiday and corporate travel sector, reported high COVID-19 period sales revenue in March 2021 after a relatively soft January and February 2021. March turnover crossed AU$100 million, up 32.7% month on month, taking gross quarterly TTV to more than AU$1 billion for the first time after COVID-19. The Company expects further growth in April 2021.

FLT reported impressive March 2021 sales revenue figures (Source: © Joggi2002 | Megapixl.com)

Australian corporate & leisure businesses, and US leisure business had a major part to play in the recent improvement. Liberty leisure business in the US were profitable in March & April 2021. The US corporate business improved significantly in April 2021.

The Company expects a loss in between AU$5 million to AU$7 million JobKeeper wage subsidy in Australia during Q4. However, FLT anticipates things to get back on track once the borders are open.

At the end of Q3, the Company had a cash balance of AU$1.5 billion. It also received additional GBP50 million UK debt facility, which further strengthened its liquidity position.

FLT’s corporate business tracking was at 29% of historic Total Transaction Value (TTV) at Q3 FY2021 end and is set for growth in market share.

Corporate Travel Management

Corporate Travel Management Limited, the provider of travel management services to the corporate market, expects a positive underlying EBITDA in Q4 FY2021. The Company is in a strong position of domestic recovery as approximately 70% of the pro-forma CY2019 revenue came from regions where the pandemic situation has improved due to the successful vaccine rollout. These regions include the US and the UK. Domestic demand was robust in ANZ & North America, and UK is likely to open in May and June 2021.

CTD anticipates positive underlying EBITDA in Q4 (Source: © Arturszczybylo| Megapixl.com)       

The Company has net cash of AU$104.8 million and has no debt. CTD believes that it has grown into much larger business post COVID-19 and has strengthened its position as a top corporate travel manager as per the total transaction value based on CY2019. The size of the Company’s North American business also expanded significantly.

On a pro-forma basis, FY2019 revenue & underlying EBITDA improved by 64% and 44%, respectively.

At present, the CTD’s business is focused on regions where the vaccine drive is advancing at a fast pace. The UK and the US are expecting widespread coverage by mid-2021. These regions represent ~70% of the pro-forma 2019 revenue. Regions including Singapore, Hong Kong & continental represents ~10% of pro-forma 2019 revenue.

Alliance Aviation Services Limited

Alliance Aviation Services Limited, the provider of Fly-in, fly-out transportation to the mining and energy sector announced a wet lease agreement with Qantas for E190 capacity provision.

The Company signed the deal on 04 February 2021 which initially was for three E190 aircrafts with options for QAN to get an extra 11 aircraft depending on market situation.

On 25 May 2021, the first three aircrafts would start the services for Qantas. Each option is for a period of three years. The outstanding options are in order and would be exercised by Qantas in the upcoming period.

On 7 April 2021, the Company had extended its air charter services agreement with BHP WA Iron Ore for additional two years.

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Stock Information

Data Source: ASX


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