The Qantas Airways Limited (ASX: QAN) share price is down 0.4% after the ASX travel share announced the acquisition of TripADeal.
TripADeal aims to offer on-trend, well-priced holidays for travellers. It works with a range of travel partners and airlines, including Qantas and Jetstar, to build and deliver ready-made packages. It recently added cruises as an option.
Qantas buys the rest of TripADeal
The airline is going to buy the remaining 49% of TripADeal, with the goal of accelerating Qantas Loyalty’s exposure to the growing $13 billion online holiday packages market.
It’s spending $211 million on this stake, with the transaction expected to be completed by the end of June 2024.
Qantas said this deal would “deepen synergies” by combining its airlines with the growing curated tour market.
With the acquisition of the whole business, Qantas expects to achieve combined cost and revenue synergies to build to at least $50 million annually across the group, over time.
The ASX travel share bought a majority stake in TripADeal in 2022, enabling frequent flyers to use Qantas points on African safaris, European getaways and other holiday packages.
Qantas said TripADeal’s offering, together with Qantas’ 15.8 million members, has seen sales and revenue growth exceed expectations. Bookings have surpassed $450 million in the last 12 months, doubling pre-COVID levels.
After the acquisition, TripADeal will continue to “operate as an independent business” and its founders Norm Black and Richard Johnston will depart the business. Matt Wolfenden, who has been at the company for seven years, has been promoted to CEO.
Management commentary
The Qantas Loyalty CEO Andrew Glance said:
With TripADeal bookings growing at 70 per cent over the last year, and more opportunities to strengthen the offering and realise further synergies, this deal is great news for our customers and the Loyalty business more broadly.
Final thoughts on the Qantas share price
The Qantas Loyalty division is still aiming for between $800 million to $1 billion of underlying EBIT (EBIT explained).
After this acquisition, Qantas Loyalty still expects to make underlying EBIT in FY24 of between $500 million to $525 million, before returning to growth of at least 10% in FY25.
This seems like a smart move by Qantas, but I wouldn’t call it as cheap as it was after rising 20% in just three months, but it still trades on a low earnings multiple and could be undervalued if travel demand remains relatively high.
