Webjet Faces Earnings Pressure from Strategic Spend and Virgin Australia Commission Cuts

Strategic Investments Weigh on Underlying Earnings

Webjet Group Limited (ASX:WJL) has closed its first full financial year as a standalone ASX-listed entity with a modest 1% rise in revenue to $136.4 million for FY26, yet underlying EBITDA fell 20% to $28.1 million. The decline reflects deliberate investments of $8 million in talent, technology, and marketing aligned with its Strategic Growth Plan, set against a backdrop of softer trading conditions and geopolitical headwinds.

Despite the EBITDA contraction, statutory net profit after tax more than doubled to $3.7 million, buoyed by non-recurring adjustments and tax benefits. The company declared a fully franked 4 cents per share dividend for FY26, exceeding 100% of underlying NPAT, consistent with its strategy to maximise franking credit distribution.

The year was marked by a significant acquisition of Locomote Holdings Pty Ltd, rebranded as Webjet Business Travel, which accelerated the company’s business travel ambitions by approximately three years. Webjet Business Travel contributed $1.2 million in revenue and an EBITDA loss of $0.6 million in its first six months under Webjet’s ownership, in line with expectations for an investment phase.

Meanwhile, the Cars & Motorhomes division staged a notable turnaround, delivering EBITDA of $4.3 million, up 169% from $1.6 million in FY25, driven by cost efficiencies and higher average booking values despite a 6% drop in bookings.

Brand Refresh and AI Integration Drive Future Growth

Webjet OTA, the company’s core online travel agency, faced a challenging environment with total bookings down 9% and TTV down 5%, impacted by elevated domestic airfares, subdued consumer confidence, and a temporary ACCC corrective notice displayed on its website. However, the brand relaunch and “Go Somewhere” marketing campaign launched in October 2025 delivered a 9.7% increase in new website visitors, with early signs of stronger customer engagement and improved marketing channel efficiency.

The company has embedded artificial intelligence across product development, engineering, customer experience, and operations, aiming to enhance platform scalability and operational efficiency. Trip Ninja, its AI-driven technology arm, was right-sized and integrated into Webjet OTA as an internal AI centre of excellence, ceasing standalone reporting from FY27.

Leadership Changes and Corporate Activity

In a notable leadership development, CEO and Managing Director Katrina Barry announced her resignation effective after the FY26 results release. Barry led the company through its demerger and initial strategic repositioning, and will remain during the transition period. The Board has commenced a search for her successor.

The Board itself saw changes with Chair Don Clarke retiring in May 2026, succeeded on an interim basis by newly appointed Non-Executive Director Dr Gary Weiss. The Board also rebuffed takeover proposals during FY26 from BGH Capital and Helloworld Travel Limited, citing undervaluation and execution uncertainties. These discussions ceased in early 2026, allowing management to refocus on executing the Strategic Growth Plan.

Outlook Clouded by Market Challenges and Commission Cuts

Looking ahead, Webjet Group anticipates a fluid and challenging FY27 trading environment. Geopolitical conflicts, inflationary pressures, and low consumer sentiment are expected to persist. The company also faces a material impact from Virgin Australia’s decision to substantially reduce commission payments from 1 July 2026, which would have trimmed approximately $3 million from FY26 revenue had it been in place.

Early FY27 trading data as of mid-May shows continued softness, with Webjet OTA bookings and TTV down 12% and 15% respectively, driven by a shift toward lower-value short-haul Asian destinations and constrained domestic demand. Cars & Motorhomes bookings and TTV are down 5% on a constant currency basis, while Webjet Business Travel direct-to-business bookings and TTV have grown around 20%, though overall business travel demand is moderating.

In this context, Webjet is maintaining a cautious approach, focusing on cost control, operational efficiency, automation, and AI integration, while preserving balance sheet strength and liquidity. The timing to reach its medium-term TTV target is under review in light of prevailing market conditions.

Investors will be watching how the company navigates these headwinds, especially the impact of commission cuts and leadership transition, as well as the pace of growth in its newly acquired business travel segment. The strategic investments made in FY26 set the stage for future growth, but the path remains uncertain amid macroeconomic and industry volatility.

These developments unfold against the backdrop of Webjet’s recent CEO resignation announcement, its decision to halt takeover talks and initiate a share buy-back, and the company’s broader progress on its FY30 growth plan, all underscoring a pivotal moment in its corporate trajectory.