Webjet Limited underwent demerger of its consumer and business-to-consumer (B2C) operations, setting it on a potential growth path.
On September 23, 2024, Webjet Limited (ASX: WEB) underwent a demerger, which resulted in the formation of Webjet Group Limited (ASX: WJL). Every shareholder of Webjet Limited received one share of Webjet Group Limited for each share held in Webjet Limited.
Subsequently, Webjet Group Limited was included in the S&P/ASX 200 Index at a zero price but was subsequently taken out of the index the next day, September 24, 2024, at the commencement of trading. Post the demerger, Webjet Limited underwent a name change to WEB Travel Group.
The restructuring of Webjet Limited into two companies, namely WEB Travel Group and Webjet B2C, presents a number of benefits, namely the emergence of two distinct entities which will be able to pursue separate strategic objectives and growth plans. Further, capital structures and financial policies can be adopted by each company in line with their specific attributes which would enable shareholders to pick the level of investment they would wish to commit to either company.
Webjet B2C has a strong and diverse revenue base, with strategies to optimize earnings and introduce higher-margin products, which help offset changes in airline commissions. Their Trip Ninja platform is boosting international market share and bringing in additional revenue. The company effectively manages costs, achieving record EBITDA margins of 44.7% for FY24. With a reliable cash flow, Webjet B2C is set for ongoing growth and plans to start paying dividends from FY26, with details to be shared at the FY25 results.
Webjet is focusing on key priorities like attracting more customers, optimizing revenue, and expanding its international market share.
By using technology and the Trip Ninja platform, the company aims to boost international flight bookings and enhance its presence in the US and Canada with GoSee. They plan to simplify customer service through automation and continue investing in innovative technology to improve their platforms. With travel bookings on the rise—thanks to increasing travel spending, a shift to online bookings, and a slow recovery in international travel—Webjet is in a great position to take advantage of these opportunities with its wide range of travel products.
Following its recent demerger, the company has a solid history of innovation, especially with its Trip Ninja technology, which makes it easier for customers to find and book multi-stop flights. However, the demerger also entails disadvantages, such as one-off transaction costs of $12.2 million in FY25 and ongoing corporate expenses of approximately $2.6 million per year for Webjet B2C and $5.5 million for WEB Travel Group. Given its good financial condition as well as the presence of a competent management team, Web Travel Group has also positioned itself to not only maintain its leadership in the online travel markets in Australia and New Zealand, but also to explore growth potential in other areas of the travel business. Overall, this exceptional combination of business capabilities along with the technological advancements makes it an interesting option for investors looking for a reliable and forward-thinking company in the travel sector.
Source: Company’s Report
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