Helloworld has detailed the financial impact it expects to absorb as a result of the shock collapse of Tempo Holidays and Bentours last month.
In a quarterly trading update this morning, the travel agency giant said it expects to incur net costs of under $1 million in relation to the collapse of the two Cox & Kings-owned brands.
“Helloworld Travel and its network members have ensured that no customers were out of pocket as a result of the collapse, and while some customers had to pay again for accommodation in the first few days following the collapse, they have either been or will be reimbursed on return to Australia,” the company said.
Travel Weekly had previously contacted Helloworld for comment over the Tempo/Bentours collapse, but it declined.
Meanwhile, the collapse of legacy travel brand Thomas Cook just a few days later in September has had no impact on Helloworld.
The company’s unaudited earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first quarter of FY20 was $24.7 million – up 7.7 per cent on the prior corresponding period.
Helloworld’s total transaction value (TTV) grew 10.4 per cent to $1.878 billion in Q1, and was up 9.2 per cent excluding the impact of business acquisitions and disposals.
The company’s Australian retail network TTV grew seven per cent on a ticketed basis during the quarter, while Helloworld’s Flights Systems B2C business experienced a whopping 92 per cent growth in TTV.
Helloworld’s Australian wholesale businesses, including Viva Holidays, Ready Rooms, SevenOceans Cruising, and Asia Escape Holidays, saw TTV grow 5.7 per cent.
Australian inbound TTV declined 9.7 per cent due mainly to a decline in UK and Asian OTA business
The company’s TTV in New Zealand was up 31.1 per cent for the quarter, including a 58.8 per cent increase in retail network TTV on a ticketed basis, and a 1.5 per cent increase in corporate travel management business.
Wholesale TTV in New Zealand fell 14.2 per cent, which Helloworld noted was mainly due to “the elimination of unprofitable contracts”, the net outcome of which was a five per cent increase in EBITDA for that business.
“We are very comfortable”
In good news for Helloworld shareholders, the company has increased its earnings guidance range for FY20 from $83 million to $87 million, to $86 million to $90 million, off the back of the TravelEdge acquisition.
“Our trans-Tasman corporate, wholesale and retail businesses are going very well and not subject to exposure to other source markets,” Helloworld CEO Andrew Burnes (pictured above) said.
“Given the state of both economies and the recent uplift in the International Monetary Fund growth forecasts for Australia, we are very comfortable with our position in the market and our focus on Australia and New Zealand.
“We have the scale to continue to deliver great outcomes for our customers and profitability for our shareholders.”