The Helloworld Travel Ltd (ASX: HLO) share price is back where it started today after the company made two positive announcements this morning. They include a contract extension with the Australian Government and a trading update for the March quarter.
After opening 1.47% higher at $1.73, the Helloworld share price has retreated back to yesterday’s closing price of $1.705.
What did Helloworld announce?
Government contract extension
Helloworld advised that the Government’s Department of Finance has exercised its option to extend its travel management services with QBT Pty Ltd, a wholly-owned subsidiary of Helloworld.
The company will continue to provide its services for the Australian government for the one-year period from 1 July 2021 to 30 June 2022.
Helloworld also advised today that its business was experiencing a strong recovery across all its corporate businesses. These include QBT, TravelEdge, Show Travel and APX in New Zealand.
The update highlighted a 580% increase in April corporate total transaction values (TTV) on the previous year, but still down around 45% on 2019. The uptick in volume was underpinned by consistently open borders across both sides of the Tasman.
This represents a significant improvement from what was previously reported in its February half-year results. The results indicated that its corporate Australian operations were running at 42% of prior year TTV, while New Zealand TTV was running at 29% prior year levels.
Helloworld also highlighted that its New Zealand-based retail and wholesale businesses are experiencing a surge in bookings following the announcement of the Cook Islands bubble.
Despite the significant rebound in New Zealand operations, this segment reflects approximately 13% of group TTV based off FY20 figures. The Australian segment accounts for a majority, or 85% of the group’s $5 billion FY20 TTV.
Why is the Helloworld share price down to 7-month lows?
The Helloworld share price has shed almost half its value from a high of $3.20 in late November 2020 to $1.705 today.
Depressed ASX travel shares surged in late November last year following COVID-19 vaccine trial updates from Pfizer. The positive updates and implications for the travel industry sent the Helloworld share price surging 75% from $1.88 to $3.20 between 9 November and 25 November.
However, this situation might reflect too much optimism before any positive financial or operational benefits materialise. With domestic travel only recently picking up, but still down on 2019 figures, and international travel at a standstill, the Helloworld share price has possibly drifted lower without any new catalysts.