The Future of ASX Travel Stocks like Flight Centre and Webjet

The travel industry is battered and bruised following the outbreak of COVID-19. Global travel has come to a standstill, affecting everything from airlines to hotels. For companies that thrive off the movement of people such as Flight Centre Travel Group Ltd [ASX:FLT] and Webjet Ltd [ASX:WEB], the impact was enormous.

No flights, no travel, and therefore no revenue was the equation.

Flight Centre and Webjet took the brunt of this in a severe plunge, the FLT share price dropped 78.98% and the WEB share price fell 78.82%.

Flight Centre - ASX FLT Share Price Chart 1

Source: Optuma

Webjet - ASX WEB Share Price Chart 1

Source: Optuma

What’s changed for FLT and WEB share prices

In recent days, the Government in Australia has announced the lifting of some travel restrictions. This should eventually allow for the easing of interstate travel bans.

International travel could still be some time off. The welcome news boosted the stock price of both companies.

At the time of writing, Flight Centre was up 8.92% to $14.34. While Webjet had gained 8.05% to $4.49.

This news could signal a small glimmer of light at the end of the tunnel for Flight Centre and Webjet.

Where to from here…

Flight Centre recently sold their Melbourne-based HQ for $62.15 million, giving the company a much-welcomed cash injection. While Webjet gained investment from substantial holders, pointing to confidence in both companies for the future.

While things are looking better, they may not be out of the woods just yet.

The All Ords made strides forward recently as discussed in our weekly market wrap, and this may have contributed to both Flight Centre and Webjet moving up in price. The move up looks positive, but cautiously positive.

Taking a technical view of both the FLT share price and WEB share price, Flight Centre is hovering near a historical resistance level of $14.70.

Should it break through this, then the level of $22.48 may become relevant. If it were to fall back, then levels of $9.05 and $3.39 may come into focus.

Flight Centre - ASX FLT Share Price Chart 2

Source: Optuma

The Webjet share price moved up strongly through the historical resistance level of $3.16 in recent weeks, this could bring the levels of $4.72 and $6.56 into play. If the WEB share price were to turn to the downside, the level of $2.30 may become a focus.

Webjet - ASX WEB Share Price Chart 2

Source: Optuma

Interesting to note that Qantas Ltd [ASX:QAN] was up 4.02% to $4.01 at the time of writing, signalling more good news for the travel sector.

It’s certainly early days, but Australia is weathering the storm remarkably well.

We can only hope ‘normal’ comes back soon.

And when it does, you can expect travel companies like WEB and FLT to eagerly welcome the return of customers and revenue.

Here at Money Morning, we aim to give readers unique insights from across the market to help them make more informed investing decisions. Money Morning is a unique publication that you can get direct to your inbox six days a week. If that sounds like something you’d be interested in, click here to read more.

Regards,

Carl Wittkopp,
For Money Morning


Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia