Domestic border reopenings help Webjet’s OTA business return to profitability

Webjet’s online travel agency division has enjoyed a profitable first half of the 2021 financial year, driven by the reopening of domestic borders.

After suffering a $6.2 million loss in the second half of FY20, Webjet OTA posted $1.1 million in earnings before interest, taxes, depreciation and amortisation (EBITDA) in the six months to 31 December.

Webjet managing director John Guscic said the company’s OTA business saw significant organic bookings traffic as soon as domestic borders opened.

“We continue to take market share, growing at twice the market since May,” he added.

However, the profitable result – which was also partly due to a 78 per cent reduction in costs tied to total transaction value (TTV), such as marketing spend – paled in comparison the $28.8 million in earnings Webjet OTA in the first half of FY20.

The group’s WebBeds division saw bookings and TTV impacted by ongoing travel restrictions and lockdowns across all regions during the six months to 31 December, but EBITDA did improve from the second half of FY20 despite a $32.4 million loss.

The Online Republic brand also saw an improvement in EBITDA, going from a $4.9 million loss in the second half of FY20 to a $2.1 million loss in the first six months of FY21.

Overall, Webjet Group recorded a $132.2 million statutory loss for the first half of the current fiscal year. Revenue was down 90 per cent to $22.6 million, and TTV fell 89 per cent to $267 million.

Webjet has undertaken a number of “significant” cost reduction initiatives in all businesses, and it expects these to deliver 20 per cent lower costs across the board when the company returns to scale.

Guscic painted a positive outlook for Webjet with his commentary, saying the demand for travel – particularly leisure – remains high.

“We believe people will want to travel as soon as they are able to, and we are doing everything we can to ensure Webjet is there to capture demand when it happens,” he said.

“Our B2C and WebBeds businesses play a critical role in travel recovery, and we are determined to emerge with stronger market shares and profitability.

“The Webjet OTA result underscores the strength of the brand and scalability of the business, and as markets reopen, we expect to continue to take market share.

“WebBeds is committed to emerging as the number one global B2B player. Its global infrastructure and footprint remains at full strength, and we are transforming the business to be more efficient in procuring and selling inventory, and servicing our customers.

“We are hopeful that global vaccine rollouts will enable travel to return to historical levels, and our strong capital position provides flexibility to weather any protracted market recovery.”

However, Webjet chairman Roger Sharp said that given the uncertainties inherent in the current travel environment, the company is not providing earnings guidance for FY21, and has not declared an interim FY21 dividend.

“Further, the company has deferred payment of its FY20 interim dividend payment, which was due to be paid on 16 April 2021,” he said.

“It will be reviewed again following 1H22 results later this year.”