The continued impacts of the COVID-19 pandemic have taken their toll on travel companies Webjet (ASX: WEB) and Corporate Travel Management (ASX: CTD), but as the vaccine is rolled out globally there may be reasons for the pair to be optimistic.
Corporate Travel Management (CTM) has recorded lower losses than expected in the December half thanks to a revenue performance of $74.2 million, despite pandemic impacts worsening in the second quarter.
The company reported an EBITDA loss of $15.7 million for the first half, and has emerged with no debt, $119 million in cash and a $178 million finance facility at 31 December 2020.
CTM believes it is positioned to benefit from a recovery in corporate travel activity, with revenue growth to accelerate in the second half of FY21.
"We are in a good position to capitalise on recovery in corporate travel activity because we have a strong balance sheet with excess cash for further opportunities," says CTD managing director Jamie Pherous.
"We are now very close to a break-even position with new client revenue momentum and remain most leveraged to the largest travel markets that are also the most advanced in rolling out vaccinations.
"We are positioned to be a significantly larger business post-COVID due to the strategic acquisition of T&T, the organic growth dynamics we are experiencing and a lower permanent cost base."
CTM also reported a statutory NPAT loss of $36.4 million during the half, down from a pre-pandemic profit of $32.9 million in 1H FY20.
December 2020 was the highest monthly revenue performance of the half at $17 million, despite being seasonally the quietest month for corporate travel.
Further, the group's ANZ business remains profitable due to new client contracts, and that segment is expected to keep growing through the second half.
Pherous says the company expects to keep riding revenue growth through the second half.
"Significant new client wins across all of our regions supported a better than expected first-half earnings result and have given us revenue momentum into the second half," says Pherous.
"We have maintained service levels throughout the pandemic and continued to invest in our proprietary technology to deploy tailored solutions to quickly address changing client needs. In fact, technology spend is returning to pre-COVID levels.
"Our scale and financial strength, combined with CTM's personalised service and tailored technology solutions, have translated into new client wins and growing market share globally."
CTM CFO steps down
CTM also announced the resignation of its global CFO Neale O'Connell today, to be replaced by deputy CFO Cale Bennett.
Pherous says O'Connell has been "instrumental" in keeping the company afloat during the pandemic period.
"He has been instrumental in managing the financial impacts on the company through COVID-19, helping to execute the acquisitions in the current period and ensuring CTM is in a strong financial position ready for the recovery," says Pherous.
"Neale has executed on these key objectives and, having transformed our group finance function, will depart knowing that the business is well-positioned for recovery post-COVID-19."
O'Connell's replacement joined the group in August 2019 and has previous experience in senior leadership roles at Bank of Queensland (ASX: BOQ), Tatts Group and Aurizon (ASX: AZJ).
"I am delighted to have such a talented and highly capable internal successor in Cale Bennett," says Pherous.
"Cale has been a key member of CTM's senior management team since his appointment and, together with Neale, has contributed to the development of the group finance function and has assisted in putting the company in a strong financial position ready for the recovery."
Shares in CTD are up 3.28 per cent to $18.61 per share at 11.57am AEDT.
Webjet on the runway to recovery
Significantly less spending in the current financial year will give Webjet (ASX: WEB) wriggle room to take off once the travel market reopens, but that doesn't mean the first half of FY21 was without pain for the flight and accommodation booking company.
The results reflect the continued impact of COVID-19 on the broader travel industry, with revenue down 90 per cent in the half to $22.6 million, and profits down 146 per cent to $40.1 million.
On an after tax basis, Webjet's underlying net loss dived by 240 per cent to $60.5 million.
Of course, the results are being compared to the pre-pandemic prior corresponding period, but the half's revenue was still significantly down on 2H20 when the company generated $48.3 million.
The company continues to maintain a strong cash position, with $283 million cash on hand at the end of the half.
Commenting on the result, managing director John Guscic said Webjet's focus is on maintaining a strong capital position.
"Cost savings across all businesses helped reduce cash burn, while allowing us to return staff to full time work," Guscic said.
"We saw significant organic bookings traffic as soon as domestic borders opened and we continue to take market share, growing at twice the market since May.
"WebBeds saw ongoing restrictions impact all regions. While we wait for those travel markets to reopen, our focus has been on executing the WebBeds' Transformation Strategy which has already delivered a step change in the cost base, and WebBeds is on track to be at least 20 per cent more cost efficient when at scale."
The company expects the domestic and leisure travel markets to lead the travel industry recovery, and trading for the rest of FY21 is expected to be in line with the latest half.
"The demand for travel - and in particular leisure travel - remains high," Guscic said.
"We believe people will want to travel as soon as they are able to and we are doing everything we can to ensure Webjet is there to capture demand when it happens.
"We are hopeful that global vaccine rollouts will enable travel to return to historical levels and our strong capital position provides flexibility to weather any protracted market recovery."
Webjet is not providing earnings guidance for FY21 and has not declared an interim dividend.
Shares in Webjet are up 2.09 per cent to $4.88 per share at 11.56am AEDT.
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