The impact of coronavirus
WHAT effect has coronavirus had on the share prices of the listed travel companies?
The chart below shows their performance since we first heard of the disease on NewYear’s Eve.
Qantas, Flight Centre, Helloworld and
Serko have fallen between 11% and 15%. CTM’s 20% decline factors in its half yearly results, while ater it also reported on Thu,
Webjet has actually gained 5% over the period.
The chart also shows declines since all-time highs. Interestingly, despite the VGI saga, CTM and Flight Centre have fared similarly. The PE ratios show the relative expense of each stock in terms of profit multiples. Serko is high because it is still regarded as a “blue sky techie” in its market share building phase.
Travel revenue is also being impacted by the fires. Given the double whammy, these declines are not as bad as they could be, however if there is an uncontainable global breakout of the virus, then all bets are off.
In that scenario, Qantas will be cushioned somewhat by the expected fall in oil prices, although its hedging activities limit this moderating effect.
You would also expect leisurecentric agencies to be harder hit because leisure travel is more discretionary than business travel, while international and especially Asian exposure are more negative than domestic and regional TTV.
What would a good recovery from the impact of coronavirus look like at this point? SARS might give us a clue, where there was a fairly quick resolution to the health crisis and no uncontrolled global outbreak.
The second chart below shows air passenger numbers over the SARS period. It shows that even with the successful containment in Jul 2003, it took until Oct for passenger numbers to recover.
Maybe this time with everything web-based it will be faster, but it will probably still take a few months for traveller confidence to return and for the entire travel industry to get back on track.
It will probably still take a few months for traveller confidence to return