The Webjet Limited (ASX: WEB) share price has continued to see volatility. But, with reporting season going on, it could be a good time for investors to get a good insight into what's going on in the wider ASX travel sector.
While every business is different, it could be useful to know what's going on with names like Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT), although the latter isn't expected to report until 25 August 2022.
However, Flight Centre did give investors an update about the situation on 25 July 2022. Remember, we haven't heard from Webjet since the release of its FY22 result in mid-May. With how rapidly changing the COVID-19 situation has been, as well as government restrictions, the latest comments could give the clearest indication of how things are going for Webjet shares in the context of the overall market.
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Flight Centre's commentary
Flight Centre said in late July that demand accelerated after concerns about the Omicron variant of COVID-19 abated and as governments around the world relaxed or removed the restrictions that had grounded most non-essential travel since the start of the pandemic.
On a monthly basis the company was tracking near, or above, pre-COVID levels in a number of businesses by the end of June 2022.
The ASX travel share said that the total transaction value (TTV) recovery has, to date, been fuelled by both an uplift in demand and higher-than-normal ticket prices linked to a lack of airline capacity, particularly on international routes.
The Flight Centre managing director Graham Turner said:
There will inevitably be ongoing challenges for the industry over the next six to twelve months as new strains of the virus emerge, airline capacity returns and as we rebuild staff numbers to required levels, but we feel that we are well placed to overcome these concerns given our corporate business' continued rise and our leisure business' ongoing strength.
I think there are some interesting nuggets in there for Webjet shares.
Corporate Travel comments
The Corporate Travel Management managing director Jamie Pherous said after its FY22 result:
Our customers are embracing the opportunity to return to face-to-face connectivity in a post-COVID world. Following the removal of most border and travel restrictions globally, the fourth quarter momentum makes us optimistic for the future, and we are pleased that the business has successfully translated that momentum into earnings.
However, the business also said that the travel industry continues to face "unprecedented resourcing shortfalls with corresponding challenges to service levels, airport and airline capacity".
Addressing that shortfall within its operations is the company's "number one priority".
However, Corporate Travel also said that the pace of recovery in travel across its regions "increased significantly", with the exception of Asia.
The company is assuming a full recovery in FY24. Management is confident there will be improving travel demand in FY23.
Is the Webjet share price a buy?
The broker Morgans is one of the more bullish on the ASX travel share, with an 'add' rating and a price target of $6.55. It thinks ASX travel shares are an opportunity because of a sell-off in the sector.
Citi is even more bullish, with a 'buy' rating and a price target of $6.94.
I think that Webjet can do well with its digital-only model and its planning to be much more profitable when back at full scale.
