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Summary
- Restrictions affecting overseas travel and cruise ships entry into Australia have been extended until 17 December.
- PM Scott Morrison pushed states to reopen borders by Christmas in a move to bring back more Australians home and suggested a travel bubble with NZ to boost tourism.
- Flight Centre reported an underlying loss before tax of $510 million in FY20 due to COVID-19 impact, a big blow from $343.5 million profit reported in FY19.
- Corporate Travel Management's NPAT stood at a loss of $8.2 million on a statutory basis in FY20 due to COVID-19 related cost increases.
Australia has extended its restrictions on travelling overseas and cruise ships entering Australian waters until mid-December. Federal Health Minister, Greg Hunt stated that under the Biosecurity Act 2015, the government would lengthen the human biosecurity emergency period by an extra 3 months.
The emergency period, which came into play in mid-March will be there until 17 December. The human biosecurity declaration makes sure that the government can take any required actions to stop and manage coronavirus to safeguard Australians.
At present, there are 4 determinations as per section 477 of the Act that are in place, which include restrictions on the sale of certain essential goods, on cruise ships entry, on overseas travelling and on retail stores at international airports.
ALSO READ: Travel Bubbles: Knights in Shining Armour for Battered Travel Industry
Australian Health Protection Principal Committee (AHPPC) has stated that the move of extension of the emergency period was apt as there is still persistent public health risk from COVID-19 in Australia and across the world.
On 4 September, Australian PM Scott Morrison urged states to reopen borders by Christmas season and soften restrictions. He stated that Australia wants to bring back more people to their homes, increasing the cap from 4000 a week and recommended that an ultimate travel bubble with NZ could help in encouraging tourism.
All the states except Western Australia committed to replace hard border by Christmas and form a consistent hotspot model across the nation to manage and contain the coronavirus spread in a National Cabinet meeting.
GOOD READ: Tourism Sector's Challenges And Strategies During Covid-19 Crisis
Tourism & Transport Forum CEO, Margy Osmond stated that the current border closure between states and territories that have relatively low cases is disrupting the tourism industry and need a replacement with the new model.
She added that the tourism industry has been losing thousands of jobs and about $6 billion in activity from shutting down of domestic travel services. She welcomed the commitment by the National Cabinet to support the tourism industry.
Let's have a look at how few ASX 200 travel stocks have been performing.
Flight Centre Travel Group Limited
Flight Centre Travel Group Limited (ASX:FLT) share price increased by 2.283%, and was trading at $12.99 on 7 September (at AEST 12:23 PM).
Flight Centre Travel Group is a retail travel agency in Australia. The agency runs nearly 1200 outlets across Australia and globally including Hong Kong, NZ, Canada, South Africa, and the UK.
The Company suffered an underlying loss before tax of $510 million for FY20 ending 30 June 2020, within the range outlined earlier while the statutory loss before tax stood at $849 million. The statutory loss consisted of one-off items of $339 million, comprising $103 million COVID-19 expense and business impairment charges of $140 million.
- FLT reported that its annual cost base was reduced by about $1.9 billion to 31.5% of pre-COVID levels and revenue was above early expectations by 31 July
- During the period, the Company strengthened its client base and organically increased market share
- The global corporate business of FLT posted an underlying PBT of $74 million during FY20
- Global leisure business posted $20 million profit during the 8 months to 29 February, but delivered substantial losses from March-June due to few forward bookings and reversal of $200 million in revenue
ALSO READ: What’s Next for This ASX 200 Share Price? - Flight Centre’s FY2020 Results
The Company witnessed an increase in demand since April, but the widespread restrictions has hindered recovery across the industry. Hence, the Company was not able to give market guidance at this initial stage. FLT would continue to get JobKeeper subsidy in FY21 also and believes that the demand for international travel will not completely recover prior to FY23 or FY24 till an effective vaccine is developed.
Do watch; COVID 19 Vaccine Game Who will Pull Off?
Corporate Travel Management Limited
Corporate Travel Management Limited (ASX:CTD) share price gained 0.755%, and was trading at $16.02, on 7 September (12: 57 PM).
Corporate Travel Management provides corporate travel management services and gives business travel advice, tickets, booking and travel recommendations.
The Group reported an underlying EBIDTA of $65 million, down 57% on pcp. In comparison, underlying NPAT fell by 67% to $32 million in FY20 after it took measures to rationalise its cost base and maintain a strong liquidity position.
However, statutory NPAT shifted to a loss of $8.2 million.
- CTD ended the year with $92.8 million cash balance and no drawn debt
- The Group had earlier postponed FY20 interim dividend to October, but has now cancelled its full year dividend
- CTD averaged EBITDA loss of $3 million per month in April to June, is below expected range of $5-$10 million per month, as was given in its May update while average revenue was at $11.5 million (April- June), higher than the expected range of $2-$5 million per month
GOOD READ: Three Key Trends Defining Travel Sector’s Recovery from COVID-19 Storm
CTD stated that the client activity has started recovering from a low-point in April to higher activity in July showing recovery is underway, particularly in the northern hemisphere as corporate clients returned back to work in August. The Company asserted that it is well placed to pursue any relevant opportunities and any potential acquisitions. However, Corporate Travel Management did not provide any earnings guidance as the government's move on border closures is yet not known.
