Helloworld not ready to sell CTM stake just yet

Helloworld will await a decision on government travel contracts before divesting its interest.

Helloworld’s 2.4 per cent stake in Corporate Travel Management came out of escrow on April 1, and the company has since sold a small amount of the holding.

But while less than 1 per cent of the holding was offloaded on Friday after the stock traded above the issue price for the first time, investors should not expect a complete exit.

Helloworld has said it will wait for a decision on government travel contracts before divesting the entire interest.

In December 2021, Helloworld sold its corporate travel and entertainment business to Corporate Travel Management for $175m.

The deal included QBT and AOT Hotels as well as lucrative federal and state government travel contracts.

As part of the agreement, Helloworld was paid $100m in cash and $75m worth of Corporate Travel Management shares. It now focuses more on leisure travel.

The outcome of government contract negotiations should be known by June.

Asked at its half-year result presentation in February about the $175m Helloworld acquisition and whether public service contracts would be retained, CTM chief Jamie Pherous said: “Whilst we hope to retain this contract, the contract would likely roll off at the end of the financial year 2024, so the outcome does not have an impact on financial year 2023 or financial year 2024.

“We are doing everything that we can do to manage and set new standards for that customer.”

CTM forecast a sharp jump in annual underlying earnings following a 79 per cent jump in interim revenue, driven by a number of new clients, as trading conditions improve.

The Brisbane-based group’s revenue soared 79 per cent to $291.9m over the six months to December 31 from a year earlier, resulting in more than a doubling of underlying earnings to $51.3m from $18.2m.