Many ASX travel sector shares went nuts today, with seemingly more support on the way from the Australian federal government.
What happened today?
The travel industry got a boost today after Australian Prime Minister made some comments at the Australian Financial Review Business Summit.
He reminded the media that Australia has given $251 billion in direct economic support. Due to the fact that money goes round and round the system – it’s not just one off expenditure – Mr Morrison said that this money has a long today.
Mr Morrison told that summit that the treasury had estimated that direct support measures will lead to 5% growth in 2020 to 2021 and 4.5% higher in 2021 to 2022, compared to scenarios where no support was given. He also boasted that the Australian economy grew 3.1% over the December quarter, driven by the private sector. Australia reportedly beat both the G7 and the OECD average.
However, it was comments about continued support for the travel sector that may have caught particular attention.
Mr Morrison acknowledged that whilst “significant progress” has been made, the job isn’t done yet.
The AFR reported that the aviation and travel sector will continue to receive government subsidies. Mr Morrison said:
“The impact of the COVID economic shock will continue to persist for specific sectors beyond the end of JobKeeper. While it is necessary to draw JobKeeper and the JobSeeker COVID supplement to a close. We do understand that ongoing targeted measures will be necessary to maintain our aviation and travel industry while assisting regions that are heavily reliant on international tourists by boosting domestic tourism to those areas.”
What was the reaction to this?
Most of the travel sector rose materially in response to this.
The Corporate Travel Management Ltd (ASX: CTD) share price rose 7.5%, the Qantas Airways Limited (ASX: QAN) share price went up 2.4%, the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price rose by 1.9%, the Webjet Limited (ASX: WEB) share price climbed 4.9%, the Flight Centre Travel Group Ltd (ASX: FLT) share price rose 4% and the Helloworld Travel Ltd (ASX: HLO) share price rose 6.8%.
This seems like good news for many, if not all, of the above businesses. As long as they can get through this difficult period, then there could be a large amount of demand on the other side of this pandemic.
