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Webjet (ASX:WEB) share price on watch after FY 2021 trading update

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The Webjet Limited (ASX: WEB) share price will be one to watch on Friday following the release of its annual general meeting update after the market close.

What was in Webjet’s update?

As well as providing investors with a breakdown on its performance during an unprecedented FY 2020, management released an update on current trading.

In respect to the latter, Webjet revealed that bookings are still down materially from the pre-pandemic levels but are improving.

The Webjet OTA business recorded monthly bookings of 18,700 during September, down from its pre-COVID average of 131,300 per month. This represents 14.2% of pre-COVID levels, which compares favourably to a 7.1% recovery by the rest of the market.

This booking performance has improved into October. Webjet OTA’s bookings hit 15% of its calendar year 2019 levels for the week ending 7 October. Management notes that this side of the business will reach break-even when levels hit 23% of 2019’s levels.

The Webjet OTA business currently has a 10% share of domestic bookings, up from 5.2% a year earlier.

The key WebBeds business is improving but remains a long way from becoming breakeven. As of 7 October, its average total transaction value (TTV) stood at 12% of calendar year 2019 levels. It will need to surpass 45% of 2019’s levels to become profitable.

Though, management believes the business is well-placed to capitalise on growth as travel markets re-open.

Finally, the Online Republic business’ bookings were at 21% of 2019’s levels at the end of the first week of October. Once this hits 37%, the business will become breakeven.

Given its strong exposure to global domestic leisure markets, management believes it is well-placed to benefit from domestic-focused tourism around the world.

Outlook.

Management warned that the global travel industry continues to be under pressure from second waves, border closures, and the timing of a COVID-19 vaccine.

In light of this, it is continuing to focus on managing its costs. Pleasingly, this has resulted in its cash burn being lower than forecast. So far in FY 2021, its monthly cash burn is $9 million a month. This compares to $10.5 million in FY 2020.

Finally, management notes that its balance sheet is strong and provides it with sufficient capital to see it through to 2022.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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