Call to accelerate vaccine rollout as travel rebounds
Corporate Travel Management has returned to profitability and expects positive results for the fourth quarter, but warns Australia's recovery will lag behind the United Kingdom and United States if the local vaccine rollout does not pick up pace.
Led by its UK and European businesses, as well as Australasia, CTM chief executive Jamie Pherous said the global business travel group broke even in March and expects positive underlying earnings for the fourth quarter.
"This will be led by the United Kingdom and Europe as well as Australia and New Zealand's regions of the business," Mr Pherous said in a briefing to UBS on Wednesday morning.
The March break-even result followed CTM's $2.8m loss in January and a $4.9m loss for the third quarter.
The standout region was New Zealand, with corporate bookings as of last week trading at levels above 160 per cent of CTM's 2019 financial year booking levels.
CTM said the US is experiencing positive signs of recovery and despite the British and European lockdowns, CTM had negotiated significant essential travel client wins.
"These regions have the most advanced vaccination rollouts and are on track for all people over 18 years of age to be vaccinated by northern hemisphere summer (June/July)," CTM said.
"The speed of rollouts supports expectations of rapid return to corporate domestic travel and meaningful levels of pan-European and trans-Atlantic travel after the northern hemisphere
Mr Pherous said the company, which had net cash of around $105m on March 31 and no debt, was well positioned for industry consolidation. It has an undrawn line of credit of around $180m.
The Brisbane-based businessman called on the need for corporate confidence in both border openings and vaccine rollouts as key factors in achieving sustainable economic recovery and the resumption of global trade.
"It is very clear from both customer feedback and client activity that businesses are keen to get back on the road. Corporate travel and company success are highly correlated - the ability to connect face-to-face supports businesses to grow at speed, improve supply chain and productivity gains, and for companies and their employees to align on strategy in ways that virtual environments simply cannot match."
Mr Pherous said that now that both the US and UK markets are well advanced in their vaccination programs, with adults deemed 'at risk' and the over-50s largely vaccinated, travel restrictions are on the verge of being relaxed.
"This will allow businesses in these regions to gain a competitive advantage on the rest of the world in economic trade and recovery, and we expect that recovery to accelerate further by June/July based on the majority of all adults being vaccinated."
Mr Pherous warned that there was a real risk that Australian and New Zealand companies could get left behind in the global recovery if we cannot participate and compete with the rest of the world.
He called for borders to remain open to maintain economic momentum and the vaccination rollout to be the government's priority with a sense of urgency to vaccinate the entire population over the age of 50.
"The government must establish and clearly communicate a framework for reopening international trade including clear metrics, benchmarks and timelines. This will enable corporate Australia to plan with confidence."
Meanwhile, leisure and corporate travel operator Helloworld said in a market update it expects to return to positive earnings in the December quarter on the basis that borders remain open, the trans-Tasman travel bubble remains open and other limited international bubbles open up in the second half of the year.
However, it expects to book a loss of up to $3m in the September quarter before turning the corner by December.
Originally published as Call to accelerate vax rollout as travel rebounds