ASX 200 travel shares have been punished harshly since March. Both local and international air travel has essentially come to a grinding halt due to the harsh lockdown restrictions caused by the coronavirus crisis.
However, the S&P/ASX 200 Index (ASX: XJO) has seen strong share price gains over the past two weeks, as general market sentiment continues to rise.
Growing hope for the ASX travel sector
In particular, increasing optimism is now flowing through to the ASX travel sector, as lockdown restrictions begin to ease.
It is now looking more likely that domestic travel will start to slowly pick up in the months ahead. There is also the possibility that a Trans-Tasman bubble may open up travel between Australia and New Zealand.
This is helping to strongly lift the share price of a number of the heavily sold off travel shares. This includes Corporate Travel Management Ltd (ASX: CTD), Flight Centre Travel Group Ltd (ASX: FLT), Webjet Limited (ASX: WEB) and Qantas Airways Limited (ASX: QAN).
Here, we look at two of those companies, Webjet and Flight Centre, that have seen a strong share price rise over 30% during the past two weeks.
Webjet
The ASX share price for Webjet has soared by over 33% since 11 May. Investors are now starting to feel more optimistic that domestic flight bookings could begin to ramp up again soon.
However, Webjet’s share price is still 50% lower than what it was back in February, despite the recent share price rally. Webjet’s shares were heavily sold off during the initial phase of the coronavirus crisis, with booking almost drying up completely.
I believe that Webjet is better placed than its rival, Flight Centre in the months ahead.
It has lower overall operating costs, due to its purely online business model. I feel that this places it in a better position to weather any further dark clouds that may be on the horizon for travel.
Flight Centre
Flight Centre has been hit very harshly during the coronavirus crisis.
The travel bookings provider recently raised $700 million from institutional and retail shareholders, in a capital raising. This will provide it with additional funds to help it get through the remainder of the travel restriction period.
The company has also been forced to undertake a range of cost-reduction initiatives. These include the loss of around 6,000 support and sales roles and the closure of a number of its retail outlets.
Rising market optimism has seen a 30.8% rally in its share price over the past two weeks. However, Flight Centre shares are still down by over 60% since February.
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More reading
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Motley Fool contributor Phil Harpur owns shares of Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Why the price of these ASX travel shares soared over 30% since mid-May appeared first on Motley Fool Australia.
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