Helloworld Travel has downgraded its FY26 Underlying EBITDA forecast to $57-$62 million, citing the impact of the ongoing Middle East conflict on airline capacity and travel bookings. Despite near-term setbacks, forward bookings from July show signs of recovery.
- FY26 Underlying EBITDA guidance lowered to $57-$62 million
- Middle East conflict disrupts flights and reduces Middle Eastern carrier capacity
- Q4 FY26 forward bookings down 4% in Australia and New Zealand
- Leisure travel demand remains resilient with bookings improving post-July
- Helloworld to maintain dividend and monitor Webjet investment
Earnings Guidance Revised Downward on Geopolitical Disruption
Helloworld Travel Limited (ASX:HLO) has slashed its full-year Underlying EBITDA guidance to a range of $57 million to $62 million, down from the previously forecast $64 million to $72 million. The revision follows a sharp disruption to travel demand caused by the ongoing conflict in the Middle East, which has unsettled forward bookings and airline operations.
The conflict has led to widespread flight cancellations and rebookings for customers travelling to Europe and the UK via Middle Eastern hubs such as Dubai, Doha, and Abu Dhabi. Notably, the three major Middle Eastern carriers servicing Australia; Emirates, Qatar Airways, and Etihad; saw their weekly flights from 150 per week drop to zero in March, with a partial recovery to 82 flights per week currently. This shift has forced a carrier mix pivot towards Asia Pacific airlines, which typically offer lower-yielding deals, impacting override income.
Q4 Bookings Impacted but Leisure Demand Shows Resilience
Before the conflict erupted, Helloworld’s forward air sales for Q4 FY26 were tracking 29% ahead of the prior corresponding period (pcp) in Australia and 16% ahead in New Zealand. The geopolitical turmoil reversed this momentum, with bookings now approximately 4% below pcp in both markets. Higher jet fuel prices have compounded the pressure by inflating airfares and dampening new travel demand.
Despite these challenges, the company remains optimistic about leisure travel’s resilience. Forward bookings from July onwards are reported as stronger than the prior year, and Helloworld expects travel demand to rebound within 60 to 90 days following any resolution of the conflict. The company emphasises that travel has become a non-discretionary expense for its core demographic, who value the expertise and support of travel professionals for complex itineraries.
Cost Management and Dividend Outlook
In response to the headwinds, Helloworld is actively managing its cost base to maintain operational readiness for a post-conflict recovery. The company plans to pay a final dividend for FY26 similar to the interim dividend paid in March, which at the current share price of $1.40 would yield about 7% fully franked.
Helloworld also continues to monitor its significant 20.1% stake in Webjet Group Limited (ASX:WJL), holding over 78 million shares. As the largest shareholder, the company is assessing its options regarding this investment amid the evolving travel sector landscape.
Bottom Line?
Helloworld’s earnings downgrade underscores the fragility of international travel amid geopolitical shocks, but early signs of booking recovery hint at potential resilience once stability returns.
Questions in the middle?
- How will prolonged Middle East instability affect Helloworld’s carrier partnerships and revenue mix?
- What strategic moves might Helloworld pursue regarding its Webjet investment amid sector volatility?
- Can the company sustain its dividend policy if travel disruptions persist beyond FY26?