The travel sector has come to a standstill during the COVID-19 pandemic with everyone from airlines to hotels reeling from the sudden decrease in demand.
The Webjet Ltd [ASX:WEB] share price is no exception, closing at $2.73 back at the end of March before initiating a trading halt.
Where is Webjet now…?
In recent weeks Webjet has taken drastic action to protect themselves from the sharp drop-off in hotel use and travel, much like we discussed in the case of Flight Centre.
After initiating a trading halt, Webjet opted for a capital raising, managing to raise $231 million, this was supported by institutional investors as well.
Roger Sharp, Webjet’s Chairman, said:
‘Webjet appreciates the commitment and support that we have received from a broad range of high-quality institutional investors. A key aim of the recapitalization process has been to prioritise the interests of our shareholders.’
Reinstatement on the ASX was able to take place on 2 April.
What’s next for Webjet and the travel sector
Right now, the world has stopped. International travel in all forms is at a standstill, even moving state to state is nearly impossible.
With no firm end in sight, the travel industry is in dark days.
Sarina Bratton, Asia-Pacific chairman of the French cruise line Ponant, noted:
‘It’s the most significant crisis in my 40 years but it’s more than that: it’s the most significant in the history of travel.’
In a recent article we discussed a significant support level of $2.65 for Webjet, which has now been reached and at this stage, the price looks to be hovering here.
Will this be the level at which we see a pivot for the Webjet share price?
With Webjet completing its capital raising and some significant investors on board, there might just be light at the end of the tunnel. Should the Webjet share price shoot up in the coming days and weeks, levels of around $5 and $9 may come into focus.
By no means is Webjet alone in this, many other travel centric companies are feeling the heat as well. Reports on both Crown Resorts Ltd [ASX:CWN] and Sydney Airport Holdings Pty Ltd [ASX:SYD] give an overall view of the travel sector.
And given the potential timeline of six months for this thing, it may be some time before we see an industry-wide return to form.
For Money Morning