WEBJET’S financial results for the year to 31 March reflect the investments the company made during the pandemic, with the company returning to profitability in the second half of the fiscal year despite the looming losses projected from the deficit of overrides and commissions.
The second half of the period also saw Webjet’s WebBeds division back in the black, but the overall result was still a loss, impacted by the $14 million write-off of the Online Republic brand which had previously operated Webjet’s now defunct cruise business.
Webjet also projected that the impact of the swathe of airline commission cuts coming into effect shortly will hit its bottom line by between $10 million and $12 million, with the revelation in stark contrast to other travel companies such as Helloworld, Corporate Travel Management, and Flight Centre Travel Group, all of which have so far downplayed the impact of the commission cuts.
The company is forecasting a return to pre-pandemic booking volumes in the October 2022 – March 2023 period, as its working capital continues to improve, with a cash surplus of $4 million per month versus a $5.5 million monthly cash burn in the prior corresponding period.
Chief Executive Officer John Guscic acknowledged the “special cooperation of our global industry partners” as the company endeavoured to minimise disruption.
“This year has been one of incredible and unprecedented industry challenges, consequent upon the chaotic changes in travel plans and restrictions which have put all travel industry service levels under enormous stress,” he said.
Meanwhile, Webjet plans to mitigate much of the hit to its revenue from commission cuts by reducing local marketing spend according to Ord Minnett Senior Research Analyst John O’Shea.
“In our view, domestic travel agents have little choice but to increase focus on the fee for service component of their offering,” he said.
“The Webjet online B2C offering is already a fee for service model, and we expect the division to continue to build on the market share gains (offline to online) delivered during the pandemic,” he predicted.