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Flying high: Webjet's second half saves the year

THE online travel booking service Webjet has shrugged off the gloomy trading conditions besetting some sectors of the economy to predict it will boost profits by more than 10 per cent this financial year.

THE online travel booking service Webjet has shrugged off the gloomy trading conditions besetting some sectors of the economy to predict it will boost profits by more than 10 per cent this financial year.

After a slight dip in earnings in the first half, Webjet's ability to win a bigger slice of the travel market in the past six months helped it notch up a 5 per cent rise in full-year profits to $11 million for the year to June.

Echoing recent comments from Flight Centre, Webjet said consumers were often treating overseas holidays as a necessity, not a discretionary item to cull in tougher times.

The upbeat guidance comes after Webjet posted a 17 per cent rise to $592 million in total transaction value - the price at which travel products and services are sold - for the year to June.

The bottom-line result includes an operating loss of about $700,000 from its new businesses in the US and Asia. Two-thirds of Webjet's business is domestic travel.

Webjet's managing director, John Guscic, said people's desire to travel had not waned despite the global economy's precarious state and huge gyrations in equity markets.

"People are willing to cut back on other parts of their discretionary spending. Maybe it is a fundamental shift in people's perception of travel," he said.

"Australians have always loved to travel and nothing in the last year has deterred them from that."

Mr Guscic, who replaced David Clarke in March, said Webjet had increased its share of the travel market, although he could not put a figure on its slice of the segment because of the fragmented nature of the industry and the lack of reliable data.

"The travel market is still growing and we are growing our share of it. The last four months have been the best four months that we have had," he said.

He believed the impact of the strong Australian dollar on encouraging people to travel overseas had been overstated. Consumers had still shown a willingness to visit countries whose currency had not declined as markedly against the Australian dollar as the US greenback had, he said.

Webjet will pay a final dividend of 6? a share on October 7, taking the payout for the year to 11?.

Shares in Webjet rose 4 per cent to $1.85 yesterday.

Webjet and other travel-related stocks such as Flight Centre and Wotif.com have also been the beneficiaries for some time of airlines discounting fares heavily to stimulate demand.


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