After losing almost $400 million in market capitalisation since the start of the year, tourism deal provider Helloworld (ASX: HLO) has today revealed a clearer picture of the damage wrought to its business by COVID-19.
The massive hit of border closures and social distancing have meant revenues from travel sales and operations are now at 5 per cent of their previous levels before the crisis.
It's a state of affairs the Melbourne-based company expects will continue until at least September.
But at the same time the company has managed to drastically cut its net monthly operating expenditure from $23 million to $2 million, largely the result of standing down 1,050 staff around the world.
Helloworld had initially planned to stand down 1,300 people and make 275 redundancies, but the JobKeeper package in Australia and the Wage Subsidy allowance in New Zealand appear to have softened the blow of a paralysed travel market.
"Since the introduction of JobKeeper in Australia, the Company has been able to re-engage with employees and as at today, HLO has over 560 personnel working in the business in Australia, New Zealand and elsewhere, many on reduced hours," the company said.
Despite this improvement, revised office rental terms and revisions to other contractual arrangements with commercial partners, Helloworld expects to incur cash losses of $1.5-2 million per month for the next six months, moving to a break-even position in Q2 FY21 and towards a small profit in the second half of FY21.
Investors were encouraged by the prediction, with shares rising 3.72 per cent to $1.81 each this morning.
The group has $150 million in total cash on hand plus $10 million worth of existing debt debt facilities, while HLO will also be among trying to claw back $3.7 million owed by Virgin Australia (ASX: VAH), now in voluntary administration.
Helloworld also announced it expects to see the reopening of the domestic travel market by September 2020 and of the trans-Tasman markets in October or November 2020. This follows recent announcements from Emirates and Etihad that it could take until 2023 for passenger demand to return to pre-crisis levels.
"HLO does not expect mid to long haul international outbound travel in the corporate or leisure markets to resume with any material volume until 2021 and a full return to past levels will be conditional upon a vaccine or cure for COVID-19 having been developed and widely distributed," the company said.
"HLO has sufficient liquidity to maintain operations for a period of 12 months or longer and is not intending to undertake a capital raising at this point in time.
"HLO and members of our agency networks in Australia and New Zealand are processing tens of thousands of refunds for travel booked with our supplier partners. Helloworld and its member agencies are charging the agreed cancellation fees at the time of the original booking."
Updated at 11:06am AEST on 1 May 2020.
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