Webjet expects 1H FY23 cash surplus to exceed $100m

Webjet (ASX: WEB) was up 5% at the open after the online travel agency flagged a return to profit by all three businesses by the end of December.

Within a market update this morning, Webjet announced that bookings are currently tracking at 95% of pre-pandemic levels, with the group now expecting first half FY23 (6 months ending 30 September 2022) cash surplus from operations to exceed $100m.

Much of the return to profit is being attributed to pent up demand for Australians holidaying overseas for the first time since the pandemic hit.

FY24 earnings to exceed pre-pandemic levels

Based on current performance, management expects the group to exceed pre-pandemic earnings in FY24 (ending 31 March 2024), well ahead of when the broader travel market.

To put that in context, John Guscic, Webjet’s managing director reminded investors that before covid hit, Webjet was delivering $157.8m in earnings (EBITDA).

“We are now seeing our strategy play out… we are excited for the limitless opportunities that lie ahead,” Guscic noted.

Operational snapshot

WebBeds: Had a strong northern hemisphere summer with bookings well ahead of pre-pandemic levels since May.

Total transaction value hit record highs in both July and then again this month.

“… we have full confidence that earnings (EBITDA) margins will expand beyond pre-pandemic levels as the business continues to scale,” noted Guscic.

Webjet OTA (online travel agency): Is on track for earnings (EBITDA) margins to be more than 35% for the full financial year, and management expects a return to pre-pandemic earnings levels once international airline capacity returns to 2019 levels.

Innovative Trip Ninja technology is on track to be launched next month for multi-stop journeys providing customers with lower pricing, unique content and greater choice.

GoSee: The rebranding to transform the old Online Republic into a business with the potential to scale in a global playing field is going to plan.

Management expects GoSee to return to pre-pandemic earnings when inbound tourism into its largest markets of A&NZ, returns to historical levels.

Webjet share price over five years.