The Webjet Limited (ASX: WEB) share price has fallen by around 10% in the past month
Compare that to the S&P/ASX 200 Index (ASX: XJO), which is only down by around 2%.
What's going on with the Webjet share price?
It's hard to avoid the fact that oil prices are now much higher than they were at the start of the year.
Aussies are seeing higher prices at service stations. But cars and trucks aren't the only transportation experiencing higher fuel costs.
Oil is a key expense of getting planes in the air. Higher fuel costs, and other inflationary pressures, may lead to higher ticket prices from the likes of Qantas Airways Limited (ASX: QAN).
It's possible that higher charges from airlines could hurt the Webjet profit margin and/or lead to lower-than-expected demand for travel, meaning less volume for Webjet.
The ASX travel share has already been living through difficult times because of the COVID-19 pandemic which has heavily impacted global travel over the last two years.
Webjet's latest result showed that the business is recovering, but it's not back to full volumes yet.
Last report
In November 2021, Webjet announced its FY22 half-year result for the six months to September 2021.
Its underlying operations showed total transaction volume (TTV) of $663 million, up 148% year on year. The revenue generated for the six months was $55.4 million, up 145%.
Webjet's half-year earnings before interest, tax, depreciation and amortisation (EBITDA) was a loss of $15.9 million. However, this was an improvement of 60% compared to the EBITDA loss of $40.1 million in the prior corresponding period.
The ASX travel share also made a net loss after tax of $43.8 million. That was an improvement of around 25% year on year. Growth in the bottom line can be helpful for the Webjet share price.
Promising signs?
Webjet said with that result, the business was turning around as global markets started to reopen. Positive working capital was delivering a $3.5 million per month cash surplus.
WebBeds was profitable since July, with half-year costs down 31% compared to pre-COVID and on track to be 20% more cost efficient at scale. November 2021 TTV was 63% of pre-COVID volumes with many key markets (at the time) yet to reopen.
The Webjet online travel agency (OTA) returned to profitability in October 2021.
Webjet also said that its third quarter was tracking ahead of the FY22 second quarter.
The ASX travel share said that it believes ongoing vaccinations, boosters and anti-viral treatments will stabilise the impact of COVID-19 within the next six to 12 months.
Based on its trajectory, at the time, of outperforming the market with its WebBeds and Webjet OTA businesses, the company believed that it would be back at pre-COVID booking volumes by the second half of FY23. This would be between October 2022 to March 2023.
Is the Webjet share price a buy?
There is a mix of views on Webjet at the moment.
Morgans rates it as a buy with a price target of $6.60. That's an upside of more than 20%, if the broker ends up being right.
However, Morgan Stanley is only 'equal-weight' on the business, with a price target of just $4.30. That's 20% lower than where it is right now.
