Despite experiencing a dour September quarter financially, Helloworld Travel has highlighted the resilience of its retail network amid the COVID-19 pandemic.
The company’s quarterly update this week revealed that, based on unaudited management accounts, total transaction value (TTV) was down 90.6 per cent in Q3 to $176.8 million compared to the same period last year.
Helloworld’s revenue for the period totalled $12.4 million, down 86.8 per cent on the prior corresponding period, after-operating expenses were down 76.6 per cent to $16.4 million, and the underlying loss in earnings for the quarter was $4.1 million – well below the $6 million forecast loss for the period.
The company noted that its retail networks in Australia and New Zealand have remained “largely intact” so far.
“However, in the absence of any industry-specific federal government assistance in Australia or the opening of state and trans-Tasman or broader trans-Pacific borders, the liquidity runway for agents is getting shorter,” it said in the quarterly update to shareholders.
Helloworld said a number of agencies have effectively ‘hibernated’ their businesses until 2021, and a number have moved operations to home or to shared premises with other agencies, while some multi-agency owners have consolidated their businesses.
“While this has resulted in a reduction in outlets, HLO has also seen a number of new members join in Australia over the last six months,” the company said.
In New Zealand, Helloworld’s branded and associate store numbers have declined by 10, with a further 13 agencies operating from home until conditions improve, while travel broker numbers have declined by 14.4 per cent.
The company expects to see the re-opening of the east coast domestic travel market by early December 2020 and of the broader trans-Tasman market from mid-December 2020.
Helloworld predicts that further Pacific island bubbles may open up with Australia and New Zealand in the first half of 2021, but noted that Western Australia has committed to keeping its borders closed until April 2021.
“HLO remains optimistic that further safe travel corridors (travel bubbles) will be established with countries such as Japan, Singapore, South Korea, China and other relatively COVID-safe nations throughout 2021 with direct non-stop air services opening up,” it said.
“HLO does not expect long-haul international outbound travel to resume with any material volume to UK/Europe or the USA until late 2021 or early 2022 and a full return to pre-COVID levels is conditional upon a vaccine or cure for COVID-19 having been developed, approved and widely distributed.
Based on current expectations, Helloworld said it will continue to incur underlying losses in earnings of $1.5 million to $2 million per month for the next six months, before moving to a break-even or better position in the fourth quarter of FY21.
“This is conditional upon all domestic borders being open by Q421 and reasonable travel bubbles being open around the Pacific, Japan and Asia for Australians and New Zealanders,” the company added.
“HLO has sufficient liquidity to maintain operations well into 2022 or longer based on current liquidity levels and cash burn rate.”