Just before midday the ASX 200 (ASX: XJO) was trading 1% after positive remarks and extra stimulus was announced by the USA this week.
However, Australian travel shares like Flight Centre Travel Group Ltd (ASX: FLT), Corporate Travel Management Ltd (ASX: CTD) and Webjet Limited (ASX: WEB) were crushing the ASX 200 on Tuesday morning, rising between 3% and 5%.
Tuesday morning update:
- Flight Centre share price: +4%
- Corporate Travel Management share price: +4.3%
- Webjet share price: +3.4%
What’s driving travel shares higher?
Over in the US this week, it was revealed that people are once again going back to travelling. According to the Transport Security Administration, some 831,789 travellers went through airports on Sunday alone, the best result since March.
Although the numbers are down 70% year over year, it’s nearly 10x the number of travellers (87,534) touching down on a Sunday in April 2020.
Closer to home, as reported here on Rask Media earlier today, Sydney Airport Holdings Ltd (ASX: SYD) has announced it will undertake a $2 billion capital raising to position itself for the future. The capital raising is being conducted at a very low share price. Sydney Airport Holdings also released its FY20 financial results.
As Rask Media’s Jaz Harrison reported, “There was a 57.3% drop in international passengers and a 56.1% fall in domestic passengers [during FY20].”
Sydney Airport’s CEO, Geoff Culbert, said uncertainty remains, so a return to normal levels of travel is hard to predict.
“Six months into the pandemic, there remains uncertainty as to how long it will take for aviation markets to return to pre-COVID-19 levels,” Culbert noted in the ASX update.
Nonetheless, the news out of the US overnight is providing some much-needed potential light at the end of the tunnel for embattled travel companies and their shareholders.
Time to buy?
Before you or I get over-enthusiastic about the news, it might be worth holding out for the latest round of financials before buying shares of Flight Centre, Corporate Travel or Webjet.
Webjet is due to report its results on August 19th along with Corporate Travel. Flight Centre is set to release its take in late August.
Webjet is expected to report a net loss of around $85 million according to analysts surveyed by Bloomberg. Over the full FY20, Flight Centre is also expected to report a loss.