IN BRIEF: News from August

Catch up on the latest industry news from August 2018.

Helloworld rewards shareholders

A strong 2018 financial year for Helloworld saw the company declare an 11c per share final dividend along with its results announcement, bringing the total payout for the year to 18c per share. The company recorded a 3.5% increase in total transaction value (TTV) to $6.1 billion and a strong 49% increase in pretax profit to $46.2 million, saying the figure was underpinned by “strong air ticket sales volume growth,” although international fares declined by 6.6% on average, hampering yield growth. The company saw its Australian agency network grow to 1,854 members, a year-on-year increase of 139 which was primarily driven by the acquisition of the Magellan Travel Group.

The Helloworld results announcement also provided detail around a number of other acquisitions, including the revelation that HLO paid a total of $1 million for a 12% stake in the Hunter Travel Group — comprising $400,000 in cash plus a 75% share in seven wholly-owned company stores, valued at $600,000. During the year Helloworld also purchased 20% of Helloworld Mackay, paying $800,000 in cash and shares for the stake in the Queensland agency.

The dividend payout rewards all of the company’s shareholders, with CEO Andrew Burnes and executive director Cinzia Burnes’ 44 million shares garnering them almost $8 million in dividends during the year. Interests associated with Consolidated Travel owner Spyros Alysandratos hold 22 million Helloworld shares, so he received around $4m, while 17.1% shareholder Qantas will have a full year payout of $3.8 million for its stake. The former Magellan Travel Group directors, who received a total of 2.4m shares as part of their payout from the acquisition, will also split about $267,000 as a result of the final 11c dividend.

Qantas continues to fly high

Qantas set a new record with its 2017/18 financial results, with an 18% increase in pre-tax profit to $1.4 billion. The excellent outcome reflected a strong market as well as the benefits of ongoing work to improve the business and build long-term value, according to CEO Alan Joyce.

Non-executive employees shared in the success via a $67 million bonus for 27,000 staff, while customers will benefit from ongoing investments such as upgrades to six lounges including the flagship Sydney International First lounge as well as in Auckland, Tokyo Narita, Brisbane International and two regional lounge refurbishments in Tamworth, NSW and Hobart, Tasmania.

Joyce noted that work on QF’s “Project Sunrise” which aims to unlock direct flights from the east coast of Australia to London and New York by 2022, advanced to a Request for Proposal stage with Airbus and Boeing, while the Qantas Group also committed to a second Pilot Academy to help meet the “unprecedented global demand for skills as the aviation sector continues to grow”. The Qantas board declared a 10c per share final dividend, as well as an on-market share buyback of up to $332 million.

Flight Centre sets record

Flight Centre last month unveiled its best ever full year results, with a $384.7 million underlying profit before tax — up 16.8% year on year and $8.2 million higher than its previous record set in 2013/14. Total transaction value increased 8.5% to $21.8 billion, with CEO Graham Turner hailing “new sales milestones established in all countries” for the company.

Flight Centre’s international businesses generated almost half of the company’s TTV, while the year also saw the deployment of the new Sabre GDS in Australia and New Zealand which “adversely impacted TTV in the short term while training was underway and normal recruitment activities were placed on hold”. The company also initiated its massive “Rebrand & Grow” plan which saw the demise of the Escape Travel and Cruiseabout brands and the redeployment of some 1,200 consultants from 250 impacted shops.

Turner noted that in Australia the company had also moved to introduce a new wage model for its leisure sales people, expected to be introduced in the coming year as part of a new Enterprise Bargaining Agreement. Just before the results announcement, the ABC aired a report where several disgruntled employees complained about low base salaries and high pressure sales tactics, which led to a slump in the company’s share price despite the record profit figure.

TravelManagers signs with Luxury Escapes

Travelmanagers last month confirmed a new agreement with Luxury Escapes, giving the company’s home-based Personal Travel Managers (PTMs) access offers from the fast-growing deals site. The move was announced at the TravelManagers annual conference in Hawaii, where the group’s finance and commercial manager, Tanyu Cilek, described it as a “real coup for both our PTMs and our clients”. Cilek said more than 500,000 travellers will enjoy a Luxury Escapes experience this year, with the pact giving PTMs the opportunity to add value via flights, insurance and pre- and post-arrangements.

Luxury Escapes CEO Adam Schwab said he was excited about the pilot program. “Luxury Escapes is not only a travel e-commerce site: we see great value in supporting a trade partner who deals with its existing and potential customers on a face-to-face basis”.

The agreement has attracted some raised eyebrows across the industry, with ATAS-accredited TravelManagers now associating itself with a non-ATAS supplier. Luxury Escapes announced its withdrawal from the AFTA Travel Accreditation Scheme earlier this year, with Schwab at the time claiming the pullout was a “value-based decision,” because the company could not justify the fee for being an ATAS member.

Goway probes Australian office

Canadian travel firm Goway has launched an investigation into so-called “family and friends” deals provided through its Sydney Outbound Retail Travel Division. The company, which is also a major inbound operator, has appointed industry veteran Ian Johnston to manage the issue, along with legal advisors PKF Forensic & Risk Services to undertake a complete audit of all bookings and payments.

The issue came to light via social media, as some of the “too good to be true” deals came unstuck and clients were unable to redeem the offers. The packages were allegedly sold via private emails out of the Sydney office, offering ludicrously generous passes providing domestic and international flights and accommodation. Goway founder Bruce Hodge told travelBulletin he first heard about the issue in late May and immediately froze all bookings, with many payments not made directly to Goway.

He stressed the issue only related to Goway’s Sydney outbound business. “Once we have all the facts it may then be necessary to refer the matter to the NSW Police for possible criminal prosecution,” he said.

QBE joins SureSave as an nib subsidiary

Listed insurance firm nib has expanded its focus on the travel sector with the $25 million acquisition of QBE Travel Insurance. The deal includes the distribution and claims capability of QBE Travel, but “excludes capital supporting the business and the QBE brand,” the company said. The transaction is part of nib’s strategy to grow its World Nomads Group travel insurance business, which includes other brands such as SureSave Travel Insurance, Travel Insurance Direct, nib Travel Insurance and World Nomads.

“QBE Travel has an extensive distribution network including partnership with well-known Australian brands, as well as a national network of more than 2,000 travel insurance agents,” said nib managing director Mark Fitzgibbon.

QBE Travel is Australia’s fourth largest travel insurer, with several key partnerships including a deal with Express Travel Group. Fitzgibbon said the QBE travel insurance business would rebrand to nib Travel Insurance once the deal is completed. However “there will be no changes to its high customer service standards…for QBE Travel customers, clients and employees it will be business as usual,” he promised.


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