Summary

  • The travel industry has been hit hard by coronavirus, the effects could be seen in Serko and Air New Zealand’s share price closing at NZ$0.89 on March 23 and NZ$0.84 on 8 April, respectively.
  • Of late, Serko’s performance appears to be encouraging as the tourism sector is recovering. The Company was recently added to indices like S&P/NZX 50 and S&P/NZX 50 Portfolio Index, along with S&P/NZX MidCap.
  • Air New Zealand witnessed hardship during the ongoing health crisis. In its recently conducted, annual shareholders meeting, the Company reported a loss before tax and other significant items of NZ$87 million for the year 2020.

Much like any other industry in COVID-19 health crisis-ridden country, the travel and tourism industry in New Zealand is also struggling to get back on track. The government of New Zealand is continually promoting domestic tourism to generate revenue in the ailing sector. While the pandemic has forced Kiwis to cancel all their international travel plans, they are encouraged to take domestic travel this year.

To give some hopes of a revival, New Zealand Prime Minister Jacinda Ardern announced on Monday, 28 September that the travel between NZ and some parts of Australia is ‘possible’ before Christmas.

ANZ region’s travel bubble has been discussed in the last few months. Right before concluding the talks, the resurgence of coronavirus cases in Melbourne, Australia delayed the discussion.

Did You Read; Is the travel bubble between Australia and New Zealand likely to go ahead?

Fact: Before coronavirus pandemic struck the country, NZ$23.7 billion, which is about 60% of the country's tourism expenditure came from the Kiwis exploring their own nation.

Companies such as Air New Zealand are keeping people connected through their domestic services during troubled times.

Let us take a glance at Serko and Air New Zealand's share prices in this article and see how they performed in 2020.

Serko Limited (NZX:SKO)

The corporate travel and expense management solutions provider Serko Limited (NZX: SKO) has its customer base in more than 35 countries. Serko, listed on both Australian and New Zealand stock exchanges, experienced a hit in its share price during the first wave of coronavirus.

Serko is not an exception to this, as most of the technology companies' share prices took a downturn after the outbreak of the coronavirus pandemic in March this year. Due to travel restrictions, the corporate travel segment was on pause, and it severely impacted Serko's share price.

On January 21, 2020, Serko’s share price closed at NZ$5.78, and by March 16, 2020, the Company’s share price was at NZ$1.99. On 23 March, Serko’s share price was noted at NZ$0.89.

Since the dropping of share price in March, Serko’s share price has now managed to climb up, giving much-needed relief to the investors. On 30 September, Serko’s share price ended the trading session at NZ$4.51, marginally up by 0.22% from its last close.

Latest announcements from Serko

On 6 September 2020, Serko was included to the indices like S&P/NZX 50 and S&P/NZX 50 Portfolio along with S&P/NZX MidCap, effective 21 September 2020.

Also, the Company was removed from the S&P/NZX SmallCap Index. Serko had a market capitalisation of NZ$265.89 million, as on September 30, 2020.

On 15 September, Serko notified that Chairperson of Serko Board, Simon Botherway had stepped down from his designation. It was followed by Claudia Batten taking up the role immediately.

Must Read; Serko Board Appoints Claudia Batten as Chairperson

Botherway would continue to serve as an independent director on the Board. In March 2020, Botherway had temporarily stepped aside from his held position citing medical reasons. Batten had been handling the posting since then.

Serko named as PwC Hi-Tech Company of the Year

New Zealand based technology solutions entity Serko was also named PwC Hi-Tech Company of the Year in 2020, last month. Serko employs 200 people worldwide. Serko has above 2 million individuals who access its technology. More than US$4.5 billion of travel transactions take place on Serko's platform each year.

Serko extended the deal with Booking.com in 2019

Last year, the US company Booking.com B.V., extended the deal with Serko, while the parent company of Booking.com, Booking Holdings Inc. invested NZ$17.5 million or around 4.7% interest in Serko, which was a component of NZ$45 million capital raising unveiled by Serko.

Air New Zealand Limited

Air New Zealand Limited (NZX:AIR) held its annual shareholder's meeting on September 29, 2020. The Chairman addressed the gathering and walked the shareholders through the Company’s journey during COVID-19 crisis.

Chairman Dame Therese Walsh said in the virtual-only meeting that Air NZ witnessed hardship during the ongoing health crisis.

The year 2020 presented unprecedented challenges and disruption, which evidently resulted in its 2020 financial results, reported in August.

The airline, which was established in 1940 is the country's most beloved airline. Air New Zealand listed on both Australian and New Zealand Stock exchanges, recorded the first yearly loss in its annual report in nearly ten years. The incurred loss was solely due to the coronavirus pandemic challenges, and travel restrictions imposed to contain the virus spread.

On January 15, 2020, Air New Zealand shares traded at NZ$3.5, but its share price reduced drastically since then. So much so that on 8 April it last traded at NZ$0.84. On 10 June, Air New Zealand shares closed at a price of NZ$1.86, but it has not been able to touch the January benchmark.

Latest announcements From Air New Zealand:

The airline operates through domestic, as well as international destinations, and had recently reduced workforce by more than 4,000 staff to survive the pandemic.

During the recently conducted virtual annual shareholders meeting, Air New Zealand stated a loss before tax and other significant items of NZ$87 million for the year 2020. The airline also stated that the operating revenue of NZ$4.8 billion is a decrease of 16 per cent from the prior year.

As on September 29, 2020, international network operators said that it had utilised NZ$110 million out of the amount NZ$900 million loan facility given by the government. The decision was taken to combat the liquidity crisis trigged by COVID-19 health crisis.

Did You Read; Air New Zealand Expects To Complete Its Capital Structure Review By Early 2021

The Bottomline

Travel and tourism industry in New Zealand have been struggling to cope up from the ill effects of the coronavirus pandemic outbreak. The companies are reporting losses and reducing their respective workforce. The overall dire situation is impacting the wellbeing of the industry and people working with it.

Currently, Tourism New Zealand and the other components of the tourism industry are working together to adjust to the challenges presented by COVID-19 crisis.

TNZ is providing businesses and individuals from the industry with adequate information on factors such as utilising digital resources, while adapting to the change in the tourism business. Not only does it provide information on business dealings, but also mental health and finance.

Even though the government is extending its support by offering schemes and funds, the travel and tourism sector is waiting for the demand to return to pre-COVID level.

On 1 October 2020, at the time of writing, Air New Zealand’s share price was at NZ$1.39, up by 1.46%.

Did You Miss Reading; Will Tourism Sector see the light of the Day? A Glance at 3 Stocks- THL, AIR, AIA

 

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