Webjet shares are up with the international border reopening getting closer.
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The Webjet Limited (ASX: WEB) share price is currently up, whilst the S&P/ASX 200 Index (ASX: XJO) is down by 1.7%. It is being reported that international travel is going to open sooner than originally expected.
What’s happening with international travel?
According to reporting by various news media, such as the Australian Financial Review, the Prime Minister Scott Morrison will announce that international borders are going to open earlier than expected. Perhaps as soon as next month.
It isn’t going to be a return to limitless international borders straight away, according to the reporting.
Vaccinated Australians will be able to leave the country. Aussies stuck overseas will also be able to return. But this is only when the double vaccinated rate of 80% has been reached.
The borders will be lifted on a state by state basis, once that state or territory reaches the required 80% rate. That means that places like the ACT and NSW are closer to potentially seeing international travel than other states.
The goal is that the international borders are going to open up before Christmas.
Over the last two years, the Webjet share price has seen a lot of volatility as COVID-19 impacts when and where travellers can go.
However, not every state leader is on board with the plan yet. According to the ABC, the Queensland Premier Ms Palaszczuk said:
It would be irresponsible and I think that Queenslanders would expect me to see some paperwork, to understand the issues before an announcement is made. So it’s a bit disappointing that we haven’t been given that due courtesy before National Cabinet. We need to be in a situation where every eligible person, so every eligible person in that cohort is offered a vaccine.
What does this mean for the Webjet share price and profit?
COVID-19 has caused a lot damage to Webjet’s profit. In FY21 it saw a net loss after tax of $156.6 million, which was even worse than the $143.6 million loss in FY20. FY21’s underlying loss was $88.8 million, which excludes some non-operating expenses.
Webjet says that there is strong pent-up demand for travel, particularly leisure travel and all its businesses are well positioned to capture it. The company has been focused on transforming all of its businesses to be ready to capitalise when global travel returns.
Management say that all businesses are highly leveraged to domestic and international leisure markets. Webjet also says that the structural shift from offline to online continues to accelerate with all businesses positioned to capture demand.
The company is aiming to become the number one global business to business provider. It says it’s on track to reduce costs by at least 20% once the company gets back to scale.
It has seen “strong demand” as travel restrictions ease in North America and Europe, suggesting “significant upside” as more international markets reopen.
Is the Webjet share price worth looking at?
Webjet is currently rated as a buy by the broker UBS, with a price target of $6.85. The broker notes that Australia’s vaccinated rate is rising, which is helping the prospects for the ASX travel share sector.
Should you invest $1,000 in Webjet right now?
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Motley Fool contributor Tristan Harrison 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.