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Highlights
- Qantas acquires majority stake in online travel business TripADeal.
- Agreement facilitates Qantas to buy the remaining stake in four years in an agreed way.
- Pre-COVID, TripADeal’s annual growth rate was above 40%.
In a move to take exposure in the packaged holidays market, aviation company Qantas Airways Limited (ASX:QAN), has acquired a majority stake in the domestic travel business, TripADeal. The acquisition will give Qantas immediate exposure to an online holiday booking market of around AU$13 billion. For this, Qantas plans to partner its Loyalty business with TripADeal’s business.
Qantas share price performance
After the announcement on ASX, QAN share price has come down by 0.824%, to trade at AU$5.415 a share. (24 May, 10:25 AM AEST). The airline company’s share price has already lost about 1.7% in last five trading days. However, it is up about 5.15% on a year-to-date basis. On ASX, Qantas Airways holds a market cap of AU$10.29 billion. QAN shares trade in the 52-week price range of AU$4.2 to 5.97 a share.
More on Qantas’ stake acquisition in TripADeal
Qantas has purchased a 51% stake in the online travel business TripADeal. The ASX-listed aviation company has plans to boost TripADeal’s revenue via a close partnership with Qantas Loyalty. The stake-holding allows Qantas Loyalty to expand to an estimated AU$13 billion worth of online packaged holiday booking market. Frequent flyers may now use Qantas Points to book TripADeal’s holiday packages.
Meanwhile, Qantas has joined existing TripADeal shareholders and founders. This deal has also bagged in an option to acquire the remaining 49% in TripADeal in the next four years. Qantas shall then acquire the 49% stake at a pre-agreed multiple of TripADeal’s bookings at the time. However, the detailed terms of the all-cash purchase by Qantas are commercial in confidence.
How will the deal benefit Qantas and TripADeal?
TripADeal has relationships with direct suppliers like hotels, tour operators and other vendors, helping it offer a well-priced domestic and international holiday package. TripADeal’s ready holiday packages will now have an option for booking using Qantas Points. The highlight here is that customers could use points regardless of Qantas airline being part of the package. As per the ASX announcement, Qantas also allows frequent flyers to earn three points for every dollar spent with TripADeal.
The business partnering shall help add Qantas Loyalty’s 14-million-member base to significantly increase TripADeal’s revenue. Pre-COVID, TripADeal’s revenue was reportedly growing at an annual rate of over 40%; monthly bookings have gone up significantly in the recent past.
The stake acquisition will also help Qantas Group expand Qantas Loyalty’s ecosystem across various sectors. It is considered a partnering that drives growth in membership and earnings. Qantas Loyalty is reportedly targeting double-digit growth in its 2022 return, targeting an underlying EBIT of AU$500 to 600 million by FY24. The earnings from the majority stake in TripADeal shall be accretive. Also, the investment in TripADeal shall add to Qantas Group’s previous capital expenditure forecast.
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