Webjet Limited (ASX: WEB) shares have been under pressure once again in 2021. Shares in the online travel agent have fallen 7.2% lower this year as COVID-19 restrictions continue to disrupt business.
Investors want to know that there’s light at the end of the pandemic tunnel. That’s where the August earnings season, including the recent Sydney Airport Holdings Pty Ltd (ASX: SYD) results, could be helpful to see what’s happening in the travel industry.
What could Sydney Airport’s results mean for Webjet shares?
For those who missed it, Sydney Airport released its latest half-year result on Friday. Some of the big takeaways were:
- Net loss after tax benefit of $97.4 million, with losses increasing 81.7% on the prior corresponding period (pcp).
- Revenue down 31.3% on the pcp to $351 million.
- Earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $210.8 million – a 29.8% loss on the pcp.
- A negative cash flow of $565.5 million for the 6 months.
Webjet shares fell 1% lower on Friday with ASX travel shares across the board being hit hard. One notable item from Sydney Airport’s results was the overall passenger numbers. Australia’s busiest airport reported a 36.4% decline in pcp with a 91% drop in international arrivals.
In what Sydney Airport CEO Geoff Culbert described as a “challenging six months”, there were a couple of positives. One of those was the trend of increasing passenger numbers once border restrictions do ease in between lockdowns. That implies that there is still demand for domestic and limited international travel when available.
Webjet makes the majority of its earnings in commissions on travel bookings. That means investors looking ahead to post-pandemic life could be encouraged by trends of increasing demand and the potential impact on earnings.
Webjet shares have been smashed during the pandemic as the broader travel industry looks to re-invent itself. One possible saving grace that Sydney Airport is holding onto is the vaccine rollout programme.
Webjet investors will be hoping the country hits its vaccination targets sooner rather than later to reduce disruption and increase earnings potential.
The post What could Sydney Airport’s results mean for Webjet (ASX:WEB) shares? appeared first on The Motley Fool Australia.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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