Yesterday, Helloworld Travel [ASX:HLO] shares bounced up by over 3% in morning trading, and ended the day at $4.78, up from $4.68 at yesterday’s open.
Helloworld Travel’s share price was up a further 1.25% in this morning’s trading, to $4.86 at the time of writing.
This is on the back of a positive announcement from the company yesterday morning, regarding the extension of its Aussie government contract.
The share price hike marks an upbeat turn for the travel agency, which dealt with controversies earlier in the year regarding a potential conflict of interest and its effect on the health of its much relied on government affiliations.
The company’s management strongly denied the rumours.
Regardless, loyal shareholders will be pleased to see the spotlight shining elsewhere.
Why are investors so excited about this announcement?
According to the release, the Department of Finance has opted to extend its deed with Helloworld’s QBT business. This will take place over a two-year period from July 1 to June 30 2021, relating to Travel Management Services for the whole of our national government.
After this period, there’s a further one-year extension available upon the Department’s discretion. This is clearly being received as great news for the company’s shareholders.
Group General Manager Corporate, Nick Sutherland, has commented in good spirits:
‘The extension was the result of the hard work and dedication by QBT’s team in delivering excellent service and capability over the initial deed period.’
What’s next for Helloworld Travel’s share price?
A contract extension, particularly with government, rarely spells out bad news for a company’s short-term growth. But what happens beyond this is anyone’s guess.
The Department may choose not to extend the contract in a few years’ time, should Helloworld Travel fail to deliver on its objectives.
Also, in this game, competition lurks at every corner. Travel shares on the ASX were predicted to take off this year, and we’ve seen plenty of positive upswings from fellow travel companies Flight Centre Travel Group Ltd [ASX:FLT] and Webjet Ltd [ASX:WEB].
But there’s no denying this is great news for Helloworld, and it’ll be fascinating to see what happens to the share price in the following months.
For Money Morning
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