This company is definitely in a holding pattern in turbulent weather.
There is plenty of promise and clear sky around but the previously pilots have steered the plane into more bad weather. Shortly it will run out of fuel.
There are new pilots on board who are making all the right noises to turn this plane around but so far there has only been more sets of new co-ordinates and promises that this baby will land. No clear sky yet.
You have to be a true believer to stick with this one.
The good news is on-line travel continues to grow, lastminute is a good international brand with non travel higher margin products and there are plenty of companies willing to purchase a company like tvl if they can turn a profit. Also good is that the Chairman is the majority shareholder who has all the incentive in the world to make it happen.
The not so good is that tvl has failed to deliver time and time again and we keep hearing that the turnaround is just around the corner. The travel side of the business has tight margins and there are few barriers to establishing an online travel website. It's all about having a brand and getting the turnover sufficient to keep your costs at an acceptable level of sales that gives you the economies of scale and ultimately profit. This has not happened so far.
Tvl has good margins and really just needs to grow its sales from the 70 million mark to over 100 million to start making some money. More easily said then done but Webjet continues to successfully do this.
It will be interesting to see what comes out in the half year results.
Will 2006 be the year?
Cheers
Perth
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