Loss-making Corporate Travel Management banks $500,000 in JobKeeper a month

One of Australia’s biggest travel groups gets $500,000 in JobKeeper a month but would prefer state borders to remain open instead of the handout.

Corporate Travel Management CEO Jamie Pherous. Picture: Liam Kidston.

Weak travel conditions saw international business travel group, Corporate Travel Management, post a $15.7m loss for the half year, down from a $64.5m profit over the previous corresponding period, but the Brisbane-based company foreshadows post COVID-19 it will emerge as a significantly stronger and larger business.

CTM managing director Jamie Pherous said while JobKeeper was contributing around $500,000 a month towards employment costs he would prefer state borders remained open over receiving a government handout.

“Clearly when we were doing over $10m a month we would much rather have the borders open,” he said.

“When they opened the borders just with domestic travel alone in December our revenue popped up,” he said.

“If they are going to get rid of JobKeeper they have to make sure the state premiers are working together to keep the borders open so industries have a chance.

“We would much prefer that the borders remain open and premiers manage the outbreaks. We don’t want the government money we want the borders to open we would be happy with that.”

Delivering CTM’s results on Wednesday Mr Pherous said total transaction volumes were down 88 per cent and revenues and other income fell 67 per cent for the half year to December 31, but the company was picking up international work as other travel businesses folded.

“Those that can manage the recovery are the ones that can win more business. We are one of the few companies that did not need to do an emergency raise,” he added.

CTM is not paying a dividend for the half year and would not give guidance but Mr Pherous said as long as the Brisbane, Sydney and Melbourne travel triangle remained open the company could produce a domestic profit.

“Obviously it was a very tough year in travel (but) our business is in very good shape. “We have zero debt and minimal cash burn, it is no longer about survival at CTM it’s all about recovery.”

Corporate Travel Management CEO Jamie Pherous. Picture: Liam Kidston.

“Those that can manage the recovery are the ones that can win more business,” said Mr Pherous.

He predicts the recovery in the United Kingdom and the United States will be fastest given they are “light years ahead in terms of vaccinating.’’

At home, Mr Pherous said the outlook in Australia is pretty good and January, despite the border shutdowns, was profitable.

Asia produced a much better result than expected given it is more highly exposed to international travel than Australia.

“Revenue was down 72 per cent and we do not expect any big change. We are dependent on vaccine rollouts.”

CTM has picked up more business particularly in Asia where it has added the clients and staff from at least three medium sized agencies at virtually no cost.

“People are leaving the industry we are acquiring their staff and clients with a view to paying a trailing revenue, we are very strong in that region in Asia, I think it’s a clever way to grow with no capital outlay.

“In all parts of the world I think things are getting worse for those businesses that rely on international travel. It is making it harder and harder for people to survive.

“We are building a much bigger business as everyone else is cutting back we know at the end we will be much bigger, we are leveraging our financial strength,” he said.

“We are very pleased with the business we are winning particularly in North America and Europe.”

The outlook is strong in North America which Mr Pherous said was the only region in the world that was not getting any government assistance.

“It is our largest contributor to revenue and new client wins and there is no doubt that in North America travel is increasing week on week and we are winning new business at an accelerating rate.”

He said the acquisition of Travel & Transport had saved around $US15m in duplicated costs and about $US1m by merging offices in Denver, Seattle, Boston, Paris and London.

“It’s important to note that we are not done here with mergers of offices...we expect further synergies as these things complete.”

“Post COVID-19 there will be more cost synergies to come from IT and finance and that does not include the synergies that may come from other acquisitions.”

CTM expects Australia, New Zealand and Europe will be profitable in the second half of 2021.

“The USA and UK represents 70 per cent of revenues and have the most upside for improvement.”

“We are well positioned to be a significantly bigger business post COVID-19,” Mr Pherous said.

Corporate Travel Management closed up 89c, or 5 per cent on Wednesday at $18.90.