Why is the Webjet share price beating the ASX 200 today?

Investors are betting that the pent-up demand for international travel will be a tailwind for the Webjet share price.

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Key points

  • The Webjet share price is outperforming the ASX 200 today after Qantas' bullish update
  • Investors are betting that the positive outlook for Qantas will turn into a tailwind for Webjet
  • But Qantas isn’t the only one in the sector with good news

Bullish updates from travel-related ASX shares are putting the wind beneath the wings of the Webjet Limited (ASX: WEB) share price today.

The Webjet share price is up 1.16 at the time of writing, to $6.10, while the S&P/ASX 200 Index (ASX: XJO) is diving 1.24%.

A trading update from Qantas Airways Limited (ASX: QAN) is exciting Webjet shareholders. The airline reported a significant rebound in free cash flow. That’s thanks to strong demand for travel following the easing of international border restrictions.

Webjet share price riding higher on Qantas’ jetstream

The pickup in sales prompted Qantas to forecast a return to profitability. The airline still expects underlying earnings before interest and tax for FY22 to be in the red. However, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is tilled to come in at between $450 million and $550 million.

The improved cash position plus the return of the travel bug was enough to convince Qantas to purchase 12 Airbus A350s. The acquisition is part of its Project Sunrise program. The new aircraft will enable Qantas to offer direct flights to Europe and the United States from any city in Australia.

“The board’s decision to approve what is the largest aircraft order in Australian aviation is a clear vote of confidence in the future of the Qantas Group,” said Qantas CEO Alan Joyce.

“The phasing of this order means it can be funded within our debt range and through earnings, while still leaving room for shareholder returns in line with our financial framework.”

More good news for the Webjet share price

What’s good for the goose is good for the gander. Investors are betting that the pent-up demand for international travel will be a tailwind for the Webjet share price too.

Better still, Qantas isn’t the only one in the sector that provided an upbeat assessment for the industry.

The Helloworld Travel Ltd (ASX: HLO) share price is also taking off today after the company released its quarterly update.

Earnings jump as travel rebounds

The travel agent said that total transaction value (TTV) in the recent quarter jumped 60% over the same time last year. TTV for the quarter ending 31 March 2022 was $419 million.

Revenue also increased by 52% to $22.8 million. While EBITDA loss narrowed to $1.9 million from $4 million over the period.

“International travel has resumed, and confidence is returning as travelers book with longer lead times and higher average spend,” said Helloworld in its ASX statement.

“Based on retail, wholesale and inbound booking intakes across the first three months of 2022 we expect a rapid improvement in revenues across the coming months.”

Clear skies ahead

But there was another big move signalling that international travel is about to make a big comeback. Regional Express Holdings Ltd (ASX: REX) announced its intention to partner with Delta Air Lines.

The airlines are aiming to sign a deal that would allow reciprocal ticketing and baggage services. The Rex and Delta connectivity is due to commence in the third quarter of 2022.

There are high hopes that all the good news will translate to further gains for Webjet. The Webjet share price has jumped over 20% over the past year.

Motley Fool contributor Brendon Lau has positions in Webjet Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Helloworld Limited. The Motley Fool Australia has positions in and has recommended Helloworld Limited. The Motley Fool Australia has recommended Webjet Ltd. 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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