Travel stocks hit by vaccine uncertainty

Travel-related companies are finding it difficult to compete with other international operators in the current environment.

Vaccinations uncertainty sent major travel stocks sliding. Picture: iStock

The federal government’s about-face on AstraZeneca vaccinations sent major travel stocks sliding on Friday, as the likelihood of a return to international travel faded at least for the foreseeable future.

The Commonwealth’s decision to advise people under the age of 50 years to refrain from taking the AstraZeneca jab confirmed most Australians won’t be fully vaccinated by October, as once flagged by Scott Morrison.

Flight Centre shares fell 2.7 per cent, to $18.42, while Corporate Travel Management lost 3 per cent to $18.77. Online travel agency Webjet shed 2.5 per cent to $5.40 and Helloworld Travel dropped 2.3 per cent, to $2.13. Meanwhile Qantas slipped 0.6 per cent to $5.45, against a flat benchmark index.

Corporate Travel Management’s chief executive Jamie Pherous said he expected the share price drop to be only a short-term market sentiment. “It’s more market sentiment on the AstraZeneca delay,” Mr Pherous told The Australian.

The Brisbane-based Mr Pherous said negative publicity about the vaccine was taking away the confidence of the over-50s to have the jab. “It is critical that this age group is vaccinated to enable the economy to fully open up,” he added.

Mr Pherous said CTM’s global operations accounted for more than 80 per cent of the business and it was difficult to compete with other international operators in the current environment.

‘‘If other companies in the world are open and travel for business and Australia can’t open up Australian companies will not be able to compete. How do you win business and finetune supply chains if you can’t travel?”

Flight Centre co-founder Graham Turner said that in the past month or so his group’s shares had gone up and down depending on vaccination announcements.

“Obviously the investors think this is slightly negative about the AstraZeneca vaccination,” he said.

“If there is good news in the US, the shares go up … it is generally 2-3 per cent up and down.

“What will make a difference is a speeding up of the vaccine rollout,” Mr Turner said, adding that he believed the government’s new advice on the AstraZeneca vaccine would not slow down the return of international travel.

“I don’t think this will slow international travel, (particularly) if they have the Pfizer vaccination or one of the other vaccines.”

Mr Turner said the main criteria was for the over-50s to be vaccinated by the end of June or soon after so that international travel could open up.

“If you want to go to places like the UK in July you will probably need to have had the vaccine.”

Travel and transport group SeaLink did not suffer any share price plunge on Friday, with its shares closing up 20c, or 2 per cent, at $10.25.

Macquarie recently valued SeaLink’s shares at $10.50 given it was looking at mergers and acquisitions and to generally grow the business. New Zealand is a logical market for its growth.