Contrary to Superhero’s assault of beach themed ads for summer trading, there was little ‘ASX on the beach’ this past summer. Unless of course, you count the shores of St Kilda… which have nothing on Thailand… *sigh*
Things may be looking up for this coming summer, and no one is more pleased than the listed travel companies that survived wave after wave of virus related interruptions, aka international travel restrictions.
The tourism and airline industries, still reeling from the multi trillion dollar losses of the past few years, are officially on the rebound. This sentiment has been validated by the ASX announcements feed which is teeming with airline and travel company tickers this week.
The well timed launch of Flight Centre Group’s (ASX: FLT) joint venture has not gone unnoticed, the Company joining forces with the likes of Goldman Travel Corporation and the Spencer Group of Companies to form Link Travel Group- an “innovative new joint venture focussed on premium and business travel.”
At the helm of the new business is independent general manager, Scott Darlow, a former Magellan Travel Group and Helloworld executive.
Initially, FLT will hold a 60% controlling interest in the joint venture which will operate on an invitation only, membership basis, pooling the best agencies and operators in the industry.
Flight Centre is hopeful that the alliance with high profile industry players will aid in steering their financial results further towards the green after reporting a $364 million loss after tax for FY21. The embattled Company was arguably one of the biggest losers of the pandemic based on their serious share price plunge hitting a 52 week low of $13.67, still limping along and nowhere near recovering to pre-Covid levels.
Qantas (ASX: QAN), who saw many of their red and white kangaroo clad planes stuck on land with their mammalian counterparts, has made significant investment into their fleet in preparation for years of buoyant travel in the years to come. The Airline will add 12 new Airbus A350s to their international fleet and 40 A321XLRs and A220 to their domestic fleet. The investment will also facilitate the creation of over 1,000 jobs and numerous career progression opportunities for those already working within the Company with delivery of the first of their new planes to be delivered before the end of 2023.
Expanding to better serve the growing resources sector, Qantas is acquiring Alliance Aviation Services (ASX: AQZ) and their fleet of 70 jets. Alliance provides charter services and passenger routes which overlap with large mine sites in Western Australia and Queensland. Identifying the opportunity early, Qantas purchased 20% of Alliance in February 2019 with plans to fully acquire the airline further down the line subject to the ACCC’s blessing. The remaining 80% of Alliance will now be acquired via a scheme of arrangement where Alliance shareholders will receive Qantas shares at a 32% premium, worth $4.75 for each Alliance share they own. Total new shares issued will be valued at approximately $614 million.
The acquisition will serve to improve QantasLink, the Airline’s regional arm.
Regional operator and QantasLink competitor Rex Airlines (ASX: REX) also hit the announcements feed this week, signing a deal with major US airline Delta (NYSE: DAL) to allow interline ticketing and baggage services, expanding the geographic reach of both companies.
While still expecting to post an overall loss for FY22, Qantas is anticipating an underlying EBITDA for the second half of FY22 to be $450-$550 million.
After posting a loss before tax of $376 million for the six months to December 31st 2021, steps to recapitalise Air New Zealand’s (ASX: AIZ) balance sheet are well underway with an equity capital raise imminent.
The national carrier of New Zealand has just completed the bookbuilding portion of their 2 for 1 pro rata renounceable rights offer which raised a total of NZD $1.2 billion. The money is intended for use to pay off the Company’s existing loan and help push them through to recovery.
Currently operating at 20% of their pre-Covid levels, Air New Zealand is trying to keep the long term horizon in their sights with losses predicted to continue beyond this financial year.
Whilst there is no doubt that the past few years have put undue strain on the travel industry, investors may begin to reframe the industry from ‘failing’ to ‘recovering’, seeing stocks like QAN which prior to the pandemic traded around the $6 mark, as ‘on sale’ rather than struggling.
Samantha Freidin is a business journalist at Emerald Financial whilst also completing a Masters of Marketing and Digital Communications at Monash University.
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