To say “Webjet shares have been poleaxed” in the past 3 months would be an insult to poleaxes.Webjet is a digital travel business spanning both global consumer markets (B2C ) and wholesale markets (‘B2B), it was established in 1998 and now claims to be the leading online travel agency (OTA) in Australia and New Zealand. Webjet says it was the world’s first to use ‘Travel Services Aggregator’ technology and is now leading the industry in blockchain innovation.
As of 31 December 2019, Webjet reported cash of $157 million with borrowings of around $190 million. However, not only that the company has also withdrawn profit guidance amid a spike in short term travel cancellations. Unfortunately, Webjet appears to have some meaty trade payables which make its working capital position a little cloudy right now.
In my (not so) humble opinion, Webjet is in a tougher place than most companies right now. That said, as a long-term investor, Webjet is an extremely appealing, capital-light, high quality business, so I have little doubt it can survive. The questions are, how long does it take for travel statistics to rebound, and will it remain in its current form as a public company?
Keep in mind, Webjet is basically just a website connecting airlines and hotels to consumers and businesses. It can cut costs (it has said it will take $10 million out of the business in FY20) and it can scale fast, in the right environment. That’s why I’m watching it.”
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