Corporate Travel Management broke even in March as recovery accelerates

Corporate Travel Management broke even in March as recovery accelerates

Corporate Travel Management (ASX: CTD) founder and CEO Jamie Pherous.

The opening of the trans-Tasman bubble has sparked a 60 per cent jump on pre-COVID levels for New Zealand bookings at Corporate Travel Management (ASX: CTD), but it is the recovery underway in US and UK markets that is giving CEO and founder Jamie Pherous the greatest cause for optimism.

Following an $8.2 million loss in FY20 and a $15.7 million loss in the December half, Corporate Travel Management (CTM) expects positive underlying EBITDA in the current quarter after the group broke even in March.

The Brisbane-based outfit has seen total client activity climb to 85 per cent of FY19 levels across Australia-New Zealand as of last week, while in NZ itself rates are 160 per cent of the FY19 numbers.

This morning Pherous told a UBS investor conference in Sydney it was very clear from customer feedback and activity that businesses were keen to "get back on the road".

"Corporate travel and company success are highly correlated - the ability to connect face-to-face supports businesses to grow at speed, improve supply chain and productivity gains, and for companies and their employees to align on strategy in ways that virtual environments simply cannot match," Pherous said.

"Now that both the US and UK markets are well advanced in their vaccination programs, with adults 'at risk' and over 50s largely vaccinated, travel restrictions are on the verge of being relaxed.

"This will allow businesses in these regions to gain a competitive advantage on the rest of the world in economic trade and recovery, and we expect that recovery to accelerate further by June/July based on the majority of all adults being vaccinated."

CTM's US market potential is also bolstered by its opportunistic and strategic acquisition of US-based Travel & Transport (T&T) in September for $275 million, which is expected to lift revenue and profit by 64 per cent and 44 per cent respectively on a pro-forma FY19 basis.

Now some 70 per cent of pro-forma FY19 revenue is generated from the US and the UK.

At home however, Pherous is concerned Australian and New Zealand companies could lag behind in the global recovery, urging for borders to stay open, a prioritisation of the vaccine roll-out and the establishment of a clearly communicated framework for re-opening international trade including clear metrics, benchmarks and timelines.

"Whilst national and state governments have done an incredible job at managing the virus and fine-tuned their tracking and tracing capabilities, there is a real risk that Australian and New Zealand companies get left behind in the global recovery if we cannot participate and compete with the rest of the world," Pherous said.

CTD shares were up 0.89 per cent to $19.20 each at 11:50am AEST.

Meanwhile, Helloworld Travel (ASX: HLO) released an update today with a similarly positive outlook for recovery, particularly with the support of government-backed half-priced tickets to regional destinations which are more suited to its leisure travel demographic than CTM's.

Helloworld's total transaction value (TTV) increased marginally by 5.4 per cent in the March quarter compared to the three months to 31 December, but this TTV was up 48 per cent on last year's September quarter.

Nonetheless, Helloworld expects a full-year underlying EBITDA loss of around $14-16 million for FY21, which it hopes to cut to $1-3 million in the September quarter this year before achieving a return to a positive result in the December quarter of 2021.

HLO shares were down 1.93 per cent to $2.03 each at 11:50am AEST.

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