Why Should You Look at ASX 200 Shares Flight Centre, Webjet, and Qantas?

  • September 10, 2020 06:31 PM AEST
  • Team Kalkine
Why Should You Look at ASX 200 Shares Flight Centre, Webjet, and Qantas?

Summary

  • Amid the ongoing market turmoil, the global corporate business of ASX 200 listed Flight Centre underlined its strength, diversity & resilience by delivering an underlying profit of ~A$74 million.
  • Flight Centre had achieved an underlying profit of almost A$150 million for eight months to 29 February 2020 & delivered record TTV.
  • ASX 200 listed Webjet Limited proposes to introduce a new Long-Term Incentive Plan (LTIP) for its key personnel and senior executives.
  • Recently, Webjet stated it is entering FY21 with a solid capital position, offering substantial financial and strategic flexibility.
  • Qantas Airways is navigating through exceptional conditions with significant progress on its 3-year recovery plan.

Tourism industry has been gutted by the impact of ongoing COVID-19 turmoil. With closed borders and second wave of COVID-19 in Australia, resuming travel services seems to be difficult.

The restrictions concerning overseas travel and cruise ships entry into Australia have been extended until 17 December 2020.

Prime Minister Scott Morrison has recently stated that people should not plan to travel interstate for Christmas. According to some media reports, the information related to prohibition of international travel until 2024 are also coming.

Amid this chaos in the travel industry, we will highlight what is the plan of these 3 ASX 200 listed companies- Flight Centre, Webjet and Qantas.

Global Corporate Business of Flight Centre Delivered A$74 million Profit

ASX 200 listed Flight Centre Travel Group Limited (ASX:FLT) has more than 20k people around the world. FLT’s vast leisure & corporate travel sales network extend through four major regions, including Australia and New Zealand (ANZ), the Americas, EMEA and Asia.

On 27 August 2020, Flight Centre updated the market with its results for the financial year 2020 ended 30 June. The Company said that results for the period were within the ranges as outlined on 13 August 2020. The underlying loss before tax was reported at A$510 million amid the most challenging trading environment the Company has ever experienced.

Prior to these restrictions, Flight Centre had attained underlying profit of A$150 million for eight months to 29 February 2020 and delivered record total transaction value (TTV).

Amid the market turmoil, the global corporate business of Flight Centre again underlined its strength, diversity & resilience by-

  • Delivering an underlying profit of approximately A$74 million for the financial year 2020.
  • Generating A$7 billion in total transaction value, 45% total of the Company.
  • Obtaining a record pipeline of new accounts, thus creating a solid platform for further organic market-share development.

The FCM business of Flight Centre alone secured enterprise, global as well as regional-level accounts with annual pre-COVID-19 spends of A$1.8 billion during FY20 and has obtained a further $A390 million worth of new business already in the financial year 2021.

Moreover, FLT stated that on an optimistic note, the revenue of the Company has exceeded its initial expectations so far and has been growing.

Source: FLT's Presentation

Outlook

  • The lesser global cost base and increased liquidity runway is in place, with a capacity to reach break-even (roughly 40% of normal TTV) with current cost base.
  • Corporate businesses are well-positioned to break-even on domestic/regional volumes, but leisure business is weighted for international travel.
  • The Company do not provide any guidance for FY21 because of uncertainty related to timeframes for lifting government restrictions.

Stock Information- On 10 September 2020, Flight Centre share price last traded at A$12.74, down by 2.151% from its previous close, with a market capitalisation of approximately A$2.59 billion.

Webjet Proposes Long Term Incentive Plan

ASX 200 listed digital travel business Webjet Limited (ASX:WEB) offers services like online travel booking across Australia, Europe, New Zealand, and other international regions. Webjet supplies lodging to the travel industry through its B2B travel provider -WebBeds.

On 2 September 2020, Webjet Limited announces that the Company proposes to introduce a new Long-Term Incentive Plan (LTIP) for its key personnel and senior executives.

The Company stated that acknowledging sacrifices of the executive team have made to support it, as well as aided in retaining employees who are sought-after and will be vital to steer the business forward. Webjet Board recommends a new LTIP introduction, as well as to achieve both long term incentive & retention grants under it.

On 19 August 2020, Webjet disclosed its annual report for the year ended 30 June 2020 and mentioned that it had extended its debt maturity to November 2022.

The FY20 results highlight the material impact of COVID-19 during the second half of 2020. Notably, heading into the fiscal year 2021, with solid capital position and a focus on market share growth.

Source: WEB ASX Announcements

The Company took extensive steps to mitigate the COVID-19 impact and prepare for the recovery of global travel, which the included the following-

  • Reduction c.50% in costs; and
  • Significantly bolstered balance sheet via A$346 million raising & A$163 million notes issue post balance date.

Outlook-

After essential worker travel, domestic leisure markets are anticipated to be the first to start across the world. Webjet highlighted that all group businesses are well-positioned to capture the pick-up in travel activity.

The Company is entering into financial year 2021 with a solid capital position, offering substantial financial and strategic flexibility.

Commenting on the outlook, Managing Director of Webjet John Guscic stated-

Stock Information- On 10 September 2020, Webjet share price was noted at A$3.91, down by 1.013%. The market capitalisation of WEB stood at A$1.34 billion, with nearly 339 million shares trading on ASX.

Qantas’ Significant Progress on 3 Year Recovery Plan

ASX 200 listed Qantas Airways Limited (ASX:QAN) is engaged into the operation of the sale of domestic and international trips, domestic air transportation services, and associated support activities such as catering, IT, engineering & maintenance, along with ground handling.

On 1 September 2020, Qantas confirmed an unsecured bond issue of A$500 million for ten years, as part of continuing management of its debt maturity profile. After settlement, the profits from this bond shall bolster short-term liquidity which subsequently utilised to pay nearly A$400 million in bonds owing to expire in June 2021.

On 20 August 2020, Qantas Airways published its results for FY20 (ended 30 June 2020) mentioning that the Company is navigating through exceptional conditions.

The Company mentioned that it is significantly progressing on initial steps of its 3-year recovery plan. The recovery plan targets A$15 billion in benefits across three years from decreased activity, with nearly A$1 billion per annum in ongoing cost savings from the financial year 2023 through efficiency gains across the Group.

During FY20, Qantas Group reported Underlying Profit Before Tax of nearly A$124 million, down 91% on the prior year.

The drop in profit showed a solid first half of the year with underlying profit before tax of almost A$771 million, followed by a near-total downfall in travel. The revenue during the second half dropped by A$4 billion due to the COVID-19 pandemic & associated border restrictions.

Stock Information- On 10 September 2020, Qantas share price last quoted at A$3.91, down by 0.255% from its previous close. With a market capitalisation of A$7.39 billion, the Company has almost 1.89 billion outstanding shares.

ALSO READ: How Long Does the Woes of Travel-Tourism and Aviation Sector Will Continue Post Lockdown?

 

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