Webjet posts loss, pleads for clarity on border openings

It’s been dragged to its first loss in 20 years, but Webjet insists it’ll be in a strong position when the travel recovery comes.

“We have a higher degree of confidence today than we had six months ago,” says Webjet CEO John Guscic. Picture: Tim Carrafa

In a sign of the devastating impact COVID-19 is having on the global tourism industry, online travel agency Webjet has reported a $112.4m loss for the half year to December 31, with total transaction values dropping nearly 90 per cent.

Webjet managing director John Guscic said it was the first loss in the past 20 years for the group, and he called for clarity from state premiers on border openings and closures.

“While we are grateful for the support the government has provided to the travel industry, without open borders and more importantly clarity on what is required to keep them open the travel industry faces significant challenges,” Mr Guscic said.

“Consumer confidence is significantly impacted and the travel industry cannot plan for any thought of recovery. Now the vaccine has landed we seek for the government to have more transparency around the milestones required to open the international borders and consistent application of those requirements across the country.”

While JobKeeper contributed $3.9m towards Webjet’s coffers, Mr Guscic said that when the payments ceases in late March he had no intention of laying off more staff, due to the substantial cash reserves the company is carrying.

Webjet would not provide earnings guidance nor pay a dividend for the 2021 financial year, but it said the closures of bricks and mortar travel agencies in both Australia and throughout the world was having a positive impact on its forward performance.

“As of December our domestic bookings were nearly two-thirds of its pre-COVID-19 levels due to the (short) state border re-openings and the significant closure of bricks and mortar travel agencies has facilitated that,” he said.

“As soon as state borders opened we went straight to profitability.”

Webjet’s logo.

Mr Guscic, who took a 60 per cent pay cut during the crisis, took heart from the fact that, according to an Amadeus study, 96 per cent of global travellers say they will continue to fly, while 94 per cent of global travellers will keep using hotels.

But he does not expect domestic travel to return to its 2019 pre-pandemic levels until 2023 and said while there was strict criteria for making more acquisitions, Webjet was looking.

“A number of our competitors have gone out of business, others are suffering financial difficulties,” Mr Guscic said.

“We have strategies in place to increase our marketshare leadership, underpinning that there is an expectation that when we get to scale our group cost will be reduced by 20 per cent.

“We will ride the upside of the travel recovery at a faster clip than we normally would.”

Rex Airlines’ new services on the Sydney to Melbourne route was a positive, Mr Guscic said.

“The reason people like dealing with us is you have all the airline options on the same search screen. Rex gives people more choice.”

Globally, the hotel inventory Webjet had secured was similar in pricing and volume as pre-COVID-19 levels, but around 25 per cent of European hotels were undecided if they would open for the European summer.

“We are in a very strong position when the recovery comes. We will be the first cab off the rank. The thing that consumers in Europe miss the most is leisure travel, it is the number one thing people are missing as a consequence of COVID-19.”

“We have a higher degree of confidence today than we had six months ago.

“We have looked at every function our business and asked how we could do it better.

“The world is going to change and will change quite readily, there will be more hotel rooms sold in 2025 than there were in 2019. They need to get them from somewhere. I would expect OTA to be a much more significant player for us.

“Asia is where a lot of the growth will be because it’s just the fastest-growing demographic for travel and greater wealth, aspirationally Asians want to travel, it will be the growth engine.

“Asia will be the most substantial element of our geographic mix and we will see a significant change in the underlying performance of our North American business which has been the smallest of our geographic mix to date.

“Travel has been a great industry, it has had phenomenal growth, it is one of the few industries where the underlying growth rate is higher than the GDP in its respective markets,” he said.

Webjet shares closed up 24c, or 5 per cent on Wednesday, at $5.02.