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Top 4 ASX travel and airline stocks: latest developments unpacked

‘The fact is that one of the earliest lessons I learned in business was that balance sheets and income statements are fiction, cash flow is reality,’ Chris Chocola once said.

Qantas, Sydney Airport and Webjet share prices in focus Source: Bloomberg

A state of lockdown

Prime Minister Scott Morrison yesterday advised all Australians against undertaking any non-essential domestic travel. Maybe more seriously, states like Victoria and New South Wales have been put into lockdown; in a move that will see only necessary services such as supermarkets, banks, pharmacies and convenience stores (amongst others) remain open.

Unsurprisingly amidst these measures and their implied economic impact, markets plunged into further chaos at the open today: the ASX 200 fell as much as 8.28% – or 399 points in the first 30-minutes of trade, with the consumer discretionary and financial sectors being hit some of the hardest.

In response to these radical but important moves from Australia’s government, a string of further Covid-19 related announcements have begun to filter out from some of the ASX’s top travel and airline companies.

Dividends take flight, cash remains reality

Cash never stopped being king, some in the markets may have merely forgotten.

In a move to bolster their balance sheet, Flight Centre (ASX: FLT) today announced that it would be cancelling its FY20 Interim Dividend; as well as implementing a 50% pay cut across the company’s senior leadership team.

'Cancelling the dividend was not a decision that was taken lightly, but we felt it was appropriate to preserve cash and protect long-term shareholder value, given the current uncertainty and the unprecedented actions that governments have been forced to adopt to slow the coronavirus's spread,' noted FLT’s MD Graham Turner.

The company is set to make a further announcement regarding additional cost cutting and cash preservation plans soon. The company is currently suspended from official quotation.

Webjet share price: suspension request

Webjet (ASX: WEB) today requested that its stock be suspended from quotation. Here, Webjet noted that it is currently finalising the details of a proposed raise, presumably as a means of shoring up its balance sheet.

However, with details of the raise yet to be finalised, the company requested 'the voluntary suspension remain in place until Webjet releases an announcement in relation to the outcome of the proposed rasing.'

This move comes even though the Webjet share price has fallen ~70% in the last month and currently hovers around 5-year lows.

Sydney Airport and Qantas share prices in focus

Elsewhere, Sydney Airport (ASX: SYD) made a somewhat lengthy market release in response to the government’s Covid-19 announced restrictions. And though the company tried to reassure investors of its strong balance sheet and liquidity position, its stock was still bid down as much as 9.88% in the first hour of trade.

'Despite the strength of our balance sheet we are in the process of reviewing our entire capital expenditure program for 2002, with the objective of continuing with critical projects and deferring less capital projects until further clarity is gained regarding the persistence of the current travel impacts,’ the company said.

At the time of writing, the Sydney Airport share price stood at $4.72.

Finally, Qantas (ASX: QAN) – Australia’s mainstay blue-chip carrier – continues to see its stock struggle: In the first hour of trade today QAN dipped to a low of $2.21 per share and continued to trade in a bearish manner after that.

Ultimately, this caps off a difficult period for everyone at Qantas. Last week the airline announced that it would be deferring its Interim Dividend payment from April to September as well as slashing domestic flights by 60%. Moreover, it was noted that though international flights would continue until ‘late March to assist with repatriation’, after that they will ‘then be suspended until at least the end of May 2020.’

How to trade ASX travel stocks

You can use CFDs to trade some of the airline and travel stocks we have discussed today – LONG or SHORT – through IG’s world-class trading platform now. For example, to buy (long) or sell (short) Sydney Airport using CFDs, follow these easy steps:

  • Create an IG Trading Account or log in to your existing account
  • Enter ‘Sydney Airport’ or ‘SYD’ in the search bar and select it
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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