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Travel group Helloworld (ASX: HLO) is set to dip into its cash reserves to ride out what has been a 2020 COVID-19 horror story.
The company's September quarter trading update was an angry sea of red with an EBITDA loss of $4.1 million.
However, Helloworld said at the end of the quarter it had total free cash of $105 million and, judging from current estimates said it had sufficient liquidity to trade into 2022.
With borders closed and grounded planes essentially curtailing Helloworld's business model, the company has seen revenue plummet by 86.8 per cent to $12.4 million.
As Helloworld CEO and managing director Andrew Burnes (pictured) said in September when the company announced a $69.9 million annual loss, 2020 has been a 'perfect storm' for the company.
In a statement that encapsulates the effect of the pandemic shutdown on the tourism industry, it's telling that an EBITDA loss of $800,000 in September was a highlight, showing a marked fall from July and August which both accounted for losses of about $1.6 million.
Total transaction volume, based on unaudited management accounts, was $176.8 million, down 90.6 per cent on the same period last year.
Total incoming international air arrivals decreased by 98 per cent between 1 March and 25 October, and outbound numbers decreased by 97.7 per cent over the same period.
However, despite the raw red ink of the results, Helloworld signalled an intent to trade on in anticipation of happier days.
The company prepaid $20 million of its bank debt on 23 October, reducing free cash to circa $85 million and increasing its undrawn debt headroom by the amount of the prepayment to about $29 million.
The tourism operator also said its cruise sales for September were up 107 per cent, mainly driven by demand for a round-the-world cruise departing Sydney in May 2022.
It tipped a return to break-even or better conditions in the fourth quarter of the FY21, allowing for a reopening of interstate borders and resumption, even if limited, of international travel.
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