The discount travel boom has produced notable winers and losers, according to three seperate disclosures.
Online airfare booking group Webjet reported a $3.7 million interim result, up 29 per cent and ahead of market expectations of around $3.2 million.
Webjet's site appeals to bargain-hunters as it allows them to quickly compare and book airfares. "All the indicators of demand are up" says webjet chief David Clarke.
On Tuesday Wotif - a short-order booking service for unused hotel rooms - said first-half earnings were likely to exceed the previous December half by 20 per cent.
With travellers obsessed with hunting down the best deal, one would expect this to be reflected in the performance of Qantas's el-cheapo Jetstar arm.
True, Jetstar boosted revenue by 12 per cent to $800 million in the December half. But Jetstar's earnings on a pre-tax basis fell 48 percent to $72 million, which points to a need for Qantas chief Alan Joyce to hone the low cost philosophy. Have they done away with the hot towels and boiled sweets already?
It's all relative though, with "proper" Qantas recording a 76 per cent earnings slump to $199 million on a 3.2 per cent revenue decline. And mention "profit" to other global airlines and you'll get more blank looks than at a hosties' rebotoxing session.
Criterion maintains a buy on Webjet, which we got on board last week at $1. Wotif is a hold.
As well as losing premium passengers, Qantas faces even stiffer headwinds as Virgins V Australia and Delta start competing on the US route.
Qantas shares yesterday lost 42c or 18 per cent, after resuming trading following the mystery $600 million capital raising. Given the dilution, the stock looks cheap for a reason and we will avoid it.
One cheeky conspiracy theorist suggests that when a company goes to market for funds before it has to, there's bound to be trouble in store.
Tim Boreham
The Australian 6th Feb 2009.
Interesting quote that bargain hunters are looking for the best deal as opposed to the cheapest deal.