The Qantas Airways Limited (ASX: QAN) share price is above the S&P/ASX 200 Index (ASX: XJO)'s clouds on Thursday amid what could be exciting news for the airline.

First up, its takeover target Alliance Aviation Services Ltd (ASX: AQZ) has posted a return to profit.

Meanwhile, the United Nations' International Civil Aviation Organization (ICAO) has forecast demand for air travel will make a complete recovery this year, returning to pre-pandemic levels.

Right now, the Qantas share price is trading at $6.55, flat with its previous close.

For comparison, the ASX 200 has dropped 0.35% at the time of writing.

Let's take a closer look at what might be going right for the flying kangaroo this morning.

Qantas share price gains amid takeover target's profitability

The Qantas share price is outperforming amid the release of Alliance Aviation's half-year earnings. Here are the key takeaways from the takeover target's results, released after the market closed on Wednesday:

• $9.5 million statutory profit – a $14 million improvement on that of the prior comparable period (pcp)
• Statutory earnings before interest, tax, depreciation, and amortisation (EBITDA) nearly doubled to reach $42.2 million
• Revenue lifted $68.4 million to $238.5 million
• Underlying cash flow came in at $27.4 million
• Declined to pay a dividend

The Alliance Aviation share price is down 0.87% to trade at $3.40 at the time of writing.

Qantas put forward a successful $4.75 per share bid for the aviation services provider in May 2022, valuing it at $764.5 million.

However, the Australian Competition & Consumer Commission (ACCC) is proving hard to convince. It's concerned the acquisition could have a negative impact on competition in the aviation sector.

Demand for air travel tipped to grow in 2023

Qantas might also be front of mind today after the ICAO stated it expects passenger demand for air travel to reach pre-pandemic levels by the first quarter of 2023.  

Demand is tipped to be around 4% stronger than it was in 2019 this year, translating to a compound annual growth rate of 0.7% between 2019 and 2024.

It also tips airlines to return to profitability in the final quarter of 2023, ending three years of losses, as long as risks impacting international air transport don't escalate.

Qantas expects to beat that prediction. The ASX 200 airline upgraded its first-half guidance in November, tipping a $1.35 billion to $1.45 billion underlying profit before tax for the period.

The post What's going on with the Qantas share price today? appeared first on The Motley Fool Australia.

The benchmark All Ordinaries Index (ASX: XAO) is struggling on Monday, but not all shares housed on the index are in the red.

The Aussie bourse's suffering follows a rough Friday on Wall Street. The US market was weighed down by strong employment data, likely heralding further rate hikes.

The Dow Jones Industrial Average Index (DJX: .DJI) plunged 2.1% on Friday, while the S&P 500 Index (SP: .INX) dumped 2.8%, and the Nasdaq Composite Index (NASDAQ: .IXIC) plummeted 3.8%.

Seemingly in response, the All Ords is down 1.39% right now, but some shares are floating above the sea of red. Indeed, some are posting gains of as much as 6%.

Keep reading to find out which stocks are outperforming and what's driving them higher.

3 ASX All Ords shares posting gains on Monday

Plenty of ASX All Ords shares are outperforming the market on Monday.

One such gainer is Archer Materials Ltd (ASX: AXE). Stock in the tech company is currently up 6.49%, trading at 82 cents apiece.

Its surge follows news of a major advance in the company's development of its 12CQ chip. It has used complementary metal-oxide-semiconductor chip technology to detect quantum information in its 12CQ qubit material at room temperature for the first time.

Archer CEO Dr Mohammad Choucair said the achievement "cannot be understated".

At the same time, the share price of ASX All Ords airline and Qantas Airways Limited (ASX: QAN) takeover target, Alliance Aviation Services Ltd (ASX: AQZ), is also outperforming.

It has gained 1.25% at the time of writing to trade at $3.24. The latest news of the takeover came in August when the competition watchdog expressed concerns over the proposition.

Finally, All Ords healthcare share 4DMedical Ltd (ASX: 4DX) is also in the green today, with its share price gaining 6.25% to trade at 68 cents at the time of writing.

It's been nearly six weeks since the market heard price-sensitive news from the medical technology developer. However, the stock has now lifted 17% since the end of September.

The post In a sea of red, these ASX All Ords shares are leaping higher on Monday appeared first on The Motley Fool Australia.

The Qantas Airways Limited (ASX: QAN) share price is in negative territory on Thursday.

This comes after the competition watchdog signalled its concerns about Qantas' monopoly in the domestic travel market.

At the time of writing, the airline operator's shares are down 0.62% to $4.79.

ACCC outlines preliminary competition concerns

In today's release, Qantas informed the market of the latest saga regarding its proposed acquisition of Alliance Aviation Services Ltd (ASX: AQZ).

The statement of issues published by the Australian Competition & Consumer Commission (ACCC), expressed concerns about the Qantas merger and how it will negatively impact competition.

Qantas and Alliance provide air transport services to regional and remote areas across the country. This includes operating routes for mining and resource companies that need to transport 'fly-in fly-out' workers.

If the acquisition goes ahead, it would mean that Qantas would control two of the top three air transport services in Queensland and Western Australia.

For example, Alliance is the only competitor to Qantas on the Brisbane-Moranbah regional passenger transport route.

As industry participants have expressed strong concerns, the ACCC is considering the level of competition provided by other airlines. Virgin and Cobham's regional services arm, which was recently purchased by Regional Express Holdings Ltd (ASX: REX) also operate regional and remote routes.

ACCC chair, Gina Cass-Gottlieb said:

Our preliminary view is that there are already significant barriers for airlines who want to enter or expand their operations in regional and remote areas, including access to pilots, airport facilities and infrastructure, and associated regulatory approvals.

… A competitive and well-functioning aviation sector is fundamental to the Australian economy.

Furthermore, the ACCC is also looking into how the removal of Alliance's aircraft leasing services would affect the other competitors.

Alliance is a key supplier of wet-leased medium-sized aircraft to other airlines. Wet-leases are arrangements where an airline leases a plane, crew, and other related services from another airline or business.

Despite the update, investors appear to have largely shrugged off the news with the Qantas share price travelling slightly lower.

On the other hand, the Alliance Aviation share price is down 3.66% to $3.42 apiece.

Qantas share price snapshot

Since the start of 2022, Qantas shares have travelled on a rollercoaster, posting a loss of around 5%.

However, when looking at a larger time frame such as the last 12 months, its shares are up 8.5%.

Qantas commands a market capitalisation of approximately $9 billion, making it the 59th largest company on the ASX.

The post Qantas share price dips as ACCC raises acquisition concerns appeared first on The Motley Fool Australia.

The Qantas Airways Limited (ASX: QAN) share price closed 1.08% higher at $4.69 today after one of its partially acquired companies posted optimistic FY22 results.

Alliance Aviation Services Ltd (ASX: AQZ) announced a 21% increase in total revenue to $369.4 million. For FY2023, it expects to see increased profitability due to the investments it made in FY2022 and a growing contract client base.

Qantas bought a 19.9% stake in Alliance Aviation in February 2019, and in May this year, the airline announced it would buy the remaining shares.

Let's learn more about why investors were bullish today on this iconic ASX airline share.

What happened with Alliance?

Alliance Aviation said that in addition to its strong revenues, earnings were also stable from its contracted revenue clients. 

Another positive highlight from the report was that flight hours grew 25% to 47,519, and this growth trend is expected to continue in the future.

However, its operating experiences and finance costs grew significantly during the same period, contracting its earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 27%, for a $47 million total loss.

Other developments fueling a Qantas lift today?

Alongside the Alliance results, today's Qantas share price boost may be attributed to other developments impacting the airline industry. Airline rivals Southwest Airlines Co (NYSE: LUV) and Air New Zealand (ASX: AIZ) both made gains today, closing at 2.45% and 2.56%, respectively.

Shares in these companies might have lifted due to a reduction in the oil price, which is a major cost to airlines. According to Bloomberg, the price of WTI crude oil has fallen 0.41% today, while Brent Crude also fell 0.27%.

Jet fuel costs airlines around 11% of their operating expenses on average.

Travel takes off

On the demand side, there is also a major tailwind. According to the World Tourism Organisation, international travel is set to soar to 55% to 70% of pre-COVID travel this year. That's a 90 to 140 per cent increase from 2021 levels.

The pent-up demand for travel may be unleashed during this period, similar to the post-pandemic spending spree seen in countries that spent months or longer under lockdown.

New Zealand, one of Australia's favourite travel destinations, fully reopened its borders to international travellers on 31 July and resumed the processing of visas.

On a global scale, Kayak reported that 167 countries are open to travel with no COVID-19 testing or quarantine required, while 32 are open to travellers with testing. 

People now have the freedom to travel to most countries without the inconvenience of self-isolating, including the world's most popular tourist destinations. Many haven't visited these places in months or sometimes years.

Thus, the share price gains of major airlines such as Qantas could reflect these changes in the demand and cost of international travel.

Qantas share price snapshot

Gains made by Qantas today outperformed the S&P/ASX 200 Industrials Index (ASX: XNJ), which delivered a 0.09% return.

The Qantas share price is currently down 8.9% year to date, trailing behind the S&P/ASX 200 Index (ASX: XJO), which has contracted 6.84% over the same period.

The airline's market capitalisation is $8.85 billion from today's gains.

The post Why did the Qantas share price fly higher today? appeared first on The Motley Fool Australia.

The share price of Qantas Airways Limited (ASX: QAN)'s takeover target Alliance Aviation Services Ltd (ASX: AQZ) is taking off after the charter operator posted its full-year earnings after the market closed on Wednesday.

After opening 1.5% lower at $3.31, the Alliance Aviation share price has rebounded to trade at $3.42 at the time of writing – representing a 1.79% gain.

Alliance Aviation share price lifts despite $7.1 million loss

• Underlying before tax profit of $45.3 million – an 11% drop on that of the prior corresponding period (pcp)
• Statutory loss before tax of $7.1 million
• Revenue came in at $367.5 million – a 19% increase
• Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) of $91 million – a 1% improvement
• Underlying operating cash flow of $99.3 million – down 52%
• Declined to pay a dividend.

The ASX airline share posted a loss for the financial year 2022 despite recording higher revenue after being hit with additional costs and write-downs.

It incurred $14 million in E190 expansion related-costs in the second half, bringing the full year total to $39.1 million. It also incurred a non-cash $12.1 million write-down of its Fokker 50 fleet, a $400,000 inventory stocktake adjustment and $750,000 in fees relating to the Qantas takeover.

The company saw 4% more contract flight hours last financial year but 57% fewer charter flight hours. It also recorded a 612% jump in wet lease flight hours.

It noted an expected uplift in financial performance in the June quarter didn't occur due to the ongoing impacts of COVID-19.

What else happened in FY22?

Of course, the major news from the airline in the financial year 2022 was the takeover bid posted by Qantas.

The national carrier's offer to hand over one Qantas share for each Alliance Aviation share – implying an equity value of $764.5 million at the time – was recommended by the smaller airline's board in May.

The Alliance Aviation share price surged 21% on the takeover news.

However, the acquisition must jump through many regulatory hoops before it can be implemented.

What did management say?

Alliance Aviation managing director Scott McMillan commented on the company's earnings, saying:  

For Alliance to be able to service the capacity demands of all our clients in the 2023 financial year and beyond it was essential that the company continued to invest in growth during the second half of the year with the full knowledge that forecast activity growth would only commence from April 2022.

What's next?

The company hasn't provided any new guidance today. Though it did outline several steps it will take going forward.

The company noted it has recently experienced greater pilot turnover. In reaction, it will increase training and recruitment of pilots and provide non-monetary incentives to those staying with the airline.

It will also converge the Unity Aviation Maintenance operations into those of Alliance Airlines and retire its Fokker 50 fleet early in a bid to simplify the business.

It maintains a positive outlook amid continually strong wet lease demand. The company also expects that, by the end of January 2023, it will have deployed all 33 of its E190 aircraft.

Alliance Aviation share price snapshot

It's been a rough year for the charter services provider's stock.

The Alliance Aviation share price fell 13% over the six months ended 30 June. That was in line with the All Ordinaries Index (ASX: XAO)'s performance.

It's currently 15% lower than at the start of 2022, while the index is recording an 8% fall year-to-date.

The post Alliance Aviation share price lifts despite full-year loss appeared first on The Motley Fool Australia.

Four ASX shares that have failed to follow the market higher today are listed below. Here's why they are falling:

Alliance Aviation Services Ltd (ASX: AQZ)

The Alliance share price is down almost 5% to $3.43. This follows the release of a fleet update by the airline operator this morning. Alliance has concluded a review on the Fokker 50 fleet and determined that customers overwhelmingly prefer jet aircraft rather than Fokker 50s on their charter services. As a result, the company will retire early and sell the turboprop fleet. This will result in a non-cash accounting write down of $12.1 million.

Aurizon Holdings Ltd (ASX: AZJ)

The Aurizon share price is down 3% to $3.91. This morning the rail freight operator released its full year results. Aurizon reported a 2% decline in net profit after tax to $525 million and a 24% decline in its final dividend to 10.9 cents per share.

Medical Developments International Ltd (ASX: MVP)

The Medical Developments International share price has sunk 18% to $1.96. This follows the completion of the healthcare company's institutional placement this morning. Medical Developments International raised a total of $20 million. These funds were raised at a sizeable discount of $2.00 per new share. The company will now seek to raise $10 million from retail investors.

Suncorp Group Ltd (ASX: SUN)

The Suncorp share price is down 4% to $11.14. Investors have been selling this insurance giant's shares after its FY 2022 results fell short of expectations. Suncorp reported a 34% decline in net profit after tax to $681 million and declared a final dividend of 17 cents per share. This compares to consensus estimates of $699 million and 23 cents per share, respectively.

The post Why Alliance, Aurizon, MVP, and Suncorp shares are dropping today appeared first on The Motley Fool Australia.

Four ASX shares that are climbing more than most today are listed below. Here's why they are storming higher:

Alliance Aviation Services Ltd (ASX: AQZ)

The Alliance Aviation share price is up 22% to $4.28. Investors have been buying this fly-in, fly-out operator's shares after it agreed to be taken over by Qantas Airways Limited (ASX: QAN). Australia's flag carrier airline has offered one Qantas share per Alliance share. This represents a 35% premium to the $3.51 Alliance share price at yesterday's close and values Alliance at an enterprise value of $919.2 million.

Amcor (ASX: AMC)

The Amcor share price is up 5.5% to $17.66. This follows a positive response to the packaging company's third-quarter update from brokers. For example, Morgans was pleased with its stronger than expected earnings per share and retained its add rating and lifted its price target on Amcor's shares to $18.60.

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price has jumped over 6% to $1.28. A number of lithium miners are charging higher today following a stellar night of trade on Wall Street for lithium miners. This was driven by a very strong quarterly result from Livent. It reported a huge jump in profits, which led to its shares surging 30% higher overnight.

QBE Insurance Group Ltd (ASX: QBE)

The QBE share price is up over 4% to $12.54 following the release of a performance update. That update revealed that the insurance giant delivered 19% growth in gross written premium during the third quarter. The company also advised that its renewal rate increases averaged 7.9% during the period.

The post Why Alliance Aviation, Amcor, Core Lithium, and QBE shares are storming higher appeared first on The Motley Fool Australia.

The Alliance Aviation Services Ltd (ASX: AQZ) share price is on cloud nine on Thursday morning amid its courtship by a much bigger player in the airline industry.

At the time of writing, shares in Australia's leading charter flight operator are commanding a $4.35 price tag, up 23.9%. In earlier trading, they hit a high of $4.48. The excitement among investors of Alliance is the byproduct of a $764.5 million bid from airline giant, Qantas Airways Limited (ASX: QAN).

What is propelling the Alliance share price higher?

Longer-term Alliance Aviation shareholders were aware of the interest from Qantas since February 2019. Back then, the largest airline operator in Australia took a 20% equity interest in Alliance as Qantas found itself being its largest customer.

Today, Qantas has made it evident it wants to take that relationship one step further by acquiring Alliance. To do so, the kangaroo-bearing airline is willing to pay one Qantas share per Alliance share — equivalent to $4.75.

The offer represents a 35% premium to the Alliance Aviation share price at the end of yesterday's session. However, the market has not responded by bidding up Alliance shares to the full $4.75. This suggests some unsureness about whether the deal will proceed or if future dividend payments will reduce the payment.

Notably, Alliance currently serves Virgin Airlines as a customer through its wet-leasing arrangement. However, if Qantas was to acquire the smaller company, this arrangement would be severed in favour of prioritising QantasLink flights.

Catching a flight on the mining boom

Amid the flying Alliance share price, Qantas made no secret that its interest is partly related to the growing resources sector. Highlighting this, Qantas CEO Alan Joyce said:

The resources sector continues to grow and any new tender for airline services will be very competitive. It makes a lot of sense for us to combine with Alliance to improve the services we can offer, which is a positive for both airlines as well as the travelling public.

As reported by ABC News, the Australian mining industry is witnessing conditions similar to that of the 2010 boom. An indicator of this was the record $3.17 billion of capital raised by the sector during Q4 2021.

In light of today's gain, the Alliance Aviation share price is now up 6% since the start of the year. Lastly, more details will be shared by the company as it progresses through the deal.

Meanwhile, the Qantas share price is down 1.15% to $5.605 at the time of writing.

The post Alliance share price rockets 24% on Qantas takeover news appeared first on The Motley Fool Australia.

Four ASX shares that are climbing more than most today are listed below. Here's why they are racing higher:

Alliance Aviation Services Ltd (ASX: AQZ)

The Alliance Aviation share price is up 3% to $3.87. This follows the announcement of a further material increase in E190 flying activities pursuant to its agreement with Qantas Airways Limited (ASX QAN). The airline giant has exercised four more leasing options, bringing the total to 18 aircraft. Qantas is leasing these aircraft and crew on three-year terms from Alliance.

Life360 Inc (ASX: 360)

The Life360 share price is up 3% to $5.54. This morning Bell Potter retained its buy rating and $10.00 price target on this location technology company's shares. Ahead of its first quarter update, the broker said: "We expect another quarter of at least 50% y-o-y growth in AMR despite Q1 traditionally not being a strong quarter."

Ramsay Health Care Limited (ASX: RHC)

The Ramsay Health Care share price has jumped 24% to $80.02. This follows the receipt of a takeover approach. According to the release, a consortium led by KKR has tabled a non-binding $88 cash per share offer to acquire the private hospital operator. This will be reduced by any dividends paid. Ramsay has granted the consortium due diligence access.

Whitehaven Coal Ltd (ASX: WHC)

The Whitehaven Coal share price is up 3% to $4.80. Investors have been buying this coal miner's shares after it released its quarterly update. For the third quarter, Whitehaven Coal reported a record average coal price of $315 per tonne. This is up from $101 in the prior corresponding period and $204 during the first half of FY 2022.

The post Why Alliance Aviation, Life360, Ramsay Health Care, and Whitehaven Coal are racing higher appeared first on The Motley Fool Australia.

The Qantas Airways Limited (ASX: QAN) share price edged higher following an update from the Australian Competition & Commission (ACCC).

At Tuesday's market close, Qantas shares ended the day up 0.19% to $5.17.

Let's take a closer look at what was released to the ASX today.

ACCC proposes not to take enforcement action over Qantas acquisition

Before market open, Brisbane-based airliner, Alliance Aviation Services Ltd (ASX: AQZ) released a statement from the ACCC regarding Qantas' 19.9% acquisition of the company.

Alliance advised that the ACCC wrote a letter stating that it will not take any further enforcement action in relation to the takeover.

Qantas secured the minority stake in Alliance during 2020 for roughly US$45 million.

At the time, alarm bells rang as the competition watchdog signalled its concerns about Qantas' monopoly in the domestic travel market.

While no action has been taken since the investigation began 3 years ago, this could change.

The ACCC said that it will continue to monitor Qantas's conduct in the industry regarding the acquisition, and action could happen at a later date.

Nonetheless, the news appears to not have bothered investors, with the Qantas share price travelling slightly higher.

On the other hand, the Alliance Aviation share price lifted 1.87% to $3.82 apiece.

Qantas share price snapshot

Since the start of 2022, Qantas shares have travelled on a rollercoaster, posting a gain of around 3%.

However, when looking at a larger time frame such as the last 12 months, its shares are relatively flat.

Qantas commands a market capitalisation of roughly $9.74 billion, making it the 60th largest company on the ASX.

The post What happened to the Qantas share price today? appeared first on The Motley Fool Australia.

Four ASX shares that are climbing more than most today are listed below. Here's why they are charging higher:

AGL Energy Limited (ASX: AGL)

The AGL share price is up over 3% to $8.30. This appears to have been driven by a broker note out of Morgans this morning. According to the note, the broker has upgraded the energy company's shares to an add rating with an improved price target of $8.83. Morgans made the move in response to improving electricity prices.

Alliance Aviation Services Ltd (ASX: AQZ)

The Alliance Aviation Services share price is up 3% to $3.86. This morning the ACCC revealed that it does not propose to take any further enforcement action in relation to the stake that Qantas Airways Limited (ASX: QAN) has in Alliance. Though, the competition watchdog warned that it will "continue to monitor Qantas's conduct in the industry in relation to Alliance and may take action at a later time."

Woodside Petroleum Limited (ASX: WPL)

The Woodside share price is up 3% to $34.01. Investors have been buying the energy producer's shares following a strong night of trade for oil prices. Speculation that further sanctions could be placed on Russian oil and coal gave oil prices a major boost.

Xero Limited (ASX: XRO)

The Xero share price is up over 4% to $107.77. This follows a strong rise by tech stocks and news of a key new appointment by the cloud-based accounting company. In respect to the latter, Xero has appointed Chris O'Neill to the position of chief growth officer. O'Neill will lead the growth of Xero's small business platform and strategic development of Xero in the Americas.

The post Why AGL, Alliance Aviation, Woodside, and Xero shares are charging higher appeared first on The Motley Fool Australia.

Is travel finally back?

Who knows. But we now have the best chance we've had in more than two years.

The world is a different place from early 2020 when the COVID-19 pandemic first started.

The medical experts now know a lot more about how to treat the deadly disease. The majority of Australians are vaccinated. Governments are no longer resorting to lockdowns, regardless of daily infection numbers.

Even unrestricted international travel is back on the cards, according to Montgomery Small Companies Fund portfolio manager Dominic Rose.

"Both the UK and the European Union have scrapped COVID-19 testing requirements for fully vaccinated travellers," he said on the Montgomery blog.

"While recent commentary from numerous US airlines suggests that North American leisure activity is back at or near pre-pandemic levels with corporate improving to 25% to 30% behind."

With this in mind, Rose's team has picked 4 ASX travel shares they love the look of right now:

Acquisition spree takes earnings higher than pre-COVID

Corporate Travel Management Ltd (ASX: CTD) took advantage of lockdown disruptions by raising fresh equity to acquire other businesses.

This ASX share bought out US corporate travel agent Travel & Transport, and the Helloworld Corporate arm of fellow ASX-listed player Helloworld Travel Ltd (ASX: HLO).

"While competitors were scrambling to cut operating costs during the depths of the downturn, mainly headcount which negatively impacts customer service levels and therefore client retention, Corporate Travel Management was strategically expanding through opportunistic M&A," said Rose.

"The company is now estimated to be the fourth largest global corporate travel manager worldwide with fully recovered EBITDA [earnings before interest, taxes, depreciation. and amortisation] of around $265 million, some 77% higher than pre-COVID levels."

While Rose acknowledged that post-pandemic work habits may be more home-based, he feels Corporate Travel Management is well-placed to outperform the competition.

"Being predominantly a northern hemisphere business, the trans-Atlantic route remains a key catalyst for the company, along with workers returning to offices — at least partially."

Corporate Travel Management shares have actually risen more than 4% for the year so far.

This airline is 3.5 times bigger now than before COVID

Alliance Aviation Services Ltd (ASX: AQZ), remarkably, was a rare company in the travel sector that profited from the pandemic.

"Alliance Aviation Services seized the moment when global airline fleets were grounded and airlines offloaded assets at distressed prices to stay liquid," said Rose.

"In June 2020, the company raised $122 million in equity to purchase a fleet of 32 Embraer E190 aircraft from various vendors, paying just cents in the dollar."

Then it just waited for other airlines to lease those planes. Indeed, Qantas Airways Limited (ASX: QAN) has taken options on 18 of them already.

The new fleet has increased Alliance's capacity by a whopping 3.5 times compared to the pre-COVID era.

"In addition to being a much larger business once the expansion assets are fully deployed, we view the company as more diversified with expanded leisure exposure (complementing the FIFO business)," Rose said.

"And we also expect improved unit economics given the higher asset utilisation of the new E190s compared to the older Fokker aircraft."

The Alliance share price has dipped 10% this year.

Tale of two travel agents 

Flight Centre Travel Group Ltd (ASX: FLT) and Webjet Limited (ASX: WEB) might have different strengths in physical stores and online sales respectively, but both these ASX travel shares raised huge money during the pandemic just to "keep the lights on".

"Flight Centre is arguably the most levered play to a rebound in travel activity," said Rose.

"Management's response to the initial demand shock was to stand down staff and raise equity capital at deeply discounted prices ($700 million equity raise in April 2020 plus a number of subsequent convertible bond issues) to strengthen the balance sheet and fund the significant working capital unwind (ticket refunds)."

Rose's team sees a brighter post-COVID era for this ASX share though, as smaller competitors have died out or shrunk even further over the past two years.

"Despite having half the number of shop fronts, management still expects to retain 95% customer reach," said Rose.

"As such, Flight Centre should retain its dominant market position in the Australian leisure travel market with potential to take further share from weakened competitors as conditions improve."

Flight Centre shares have gained more than 6% so far in 2022, although they are still 19% down from their October high. 

Meanwhile, Webjet turned its focus to its wholesale WebBeds division during the pandemic.

"WebBeds is looking to take advantage of the changed competitive landscape and become the No. 1 travel wholesaler globally (currently No. 2)," said Rose.

"Additionally, Webjet, which commanded a 50% share of domestic online bookings pre-pandemic, is aiming to outperform the market recovery by 1.5x as the structural migration towards online accelerates and underpinned by superior technology."

The Webjet share price has headed up almost 4% for the year, although it's still almost 15% below its November peak.

The post Finally! 4 travel ASX shares ready to take off: expert appeared first on The Motley Fool Australia.

ASX travel shares may be on the rise this year, but it hasn't been smooth sailing for all companies in the sector.

The Alliance Aviation Services Ltd (ASX: AQZ) share price is down nearly 9% since market close on 31 December. In the same time frame, Apollo Tourism & Leisure Ltd (ASX: ATL) also fell nearly 9% and Experience Co Ltd (ASX: EXP) descended nearly 3%.

In comparison Qantas Airways Limited (ASX: QAN) has soared nearly 8% since 31 December, Webjet Limited (ASX: WEB) has surged nearly 18% and Flight Centre Travel Group Ltd (ASX: FLT) has also climbed 18%.

Omicron variant woes

Alliance Aviation is a Queensland airline operating both domestic and international flights in the mining, government, tourism, corporate, and private sectors.

In its HY 1FY22 results released after the market closed on Wednesday, this ASX travel share reported COVID-19 had caused a "significant ongoing delay" to its wet lease deployment. Alliance Aviation reported an underlying profit before tax of $20.7 million, a $6 million decline. The Alliance Aviation share price fell by 5% the following day.

Commenting on the results, Alliance managing director Scott McMillan said:

It is well known that there have been numerous impacts on the national economy brought about by COVID-19 and various government responses. As a result, the company has suffered a delay on wet lease flying activity.

Alliance maintains a very confident outlook and is of the view that significant additional flying will commence in April this year.

Alliance will continue to invest in fleet, equipment, spare parts and personnel to ensure the company has the required capacity to satisfy its contracted wet lease routes and other future growth post COVID-19.

Apollo and Experience have not released any price-sensitive news to the market this year. However, COVID-19 Omicron travel disruptions appear to have impacted investor sentiment.

Apollo is an Australian tourism leisure company operating in New Zealand, North America, Germany, the UK, and Ireland. Meanwhile, Experience is an adventure tourism and leisure company offering fun activities including sky-diving, reef and rainforest tours and island day trips.

Could better days be ahead?

Despite the tough start to the year, Experience and Apollo have made major gains this week on the back of the international borders opening. The Experience Co share price has surged 6% since the market closed on 4 February, while Apollo has gained nearly 11%.

As Motley Fool Australia reported this week, Australia's international borders will open to tourists on February 21 which could benefit ASX travel shares.

Forager Funds management analyst Alex Shevelev said tourism operators will now have more confidence to prepare for international arrivals. He added:

Companies like skydive and Great Barrier Reef tour operator Experience Co and recreational vehicle owners Tourism Holdings (NZE: THL) and Apollo have struggled through the COVID travel decimation for two years while working to improve their businesses.

When tourists return they will be well positioned to finally benefit.

While the recovery will be gradual, the industry will be hoping that the initial trickle of tourists will be followed by a torrent of arrivals. Importantly, many operators have lowered their cost bases and will be more profitable when arrivals approach pre-COVID levels.

ASX travel shares summary

The Alliance Aviation share price has slipped 14% over the past year while Apollo has skyrocketed 69%. Meanwhile, Experience has surged 82% in the last 52 weeks.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned 5% over the past year.

The post Why are some ASX travel shares recovering slower than others? appeared first on The Motley Fool Australia.

They are as follows:

Alliance Aviation Services Ltd (ASX: AQZ)

This airline and aviation services company has been given an add rating and $5.05 price target. This is materially higher than where the Alliance Aviation Services share price currently trades.

The broker believes that investors should look beyond the short term turbulence that the company is facing and feels that an inflection point is coming.

It commented: "AQZ's interim result and FY22 guidance was weaker than expected. However, significant progress on its E190 deployment has been achieved over the past ~18 months and cash generation in the underlying Fokker business remained robust. Our positive investment case on AQZ has been predicated on the step-change in FY23 earnings growth as its material fleet expansion is deployed and we continue to think the company is nearing this inflection point."

Dexus Industria REIT (ASX: DXI)

Another ASX share that Morgans is a fan of is Dexus Industria (formerly known as APN Industria). It has put an add rating and $3.65 price target on the industrial property company's shares.

Morgans believes that the significant work it has done during the first half has positioned it for growth in the coming years. This includes $584 million in new acquisitions that were funded via a capital raising. It also highlights its attractive dividend yield.

The broker commented: "We retain an Add rating on a revised price target of $3.65. DXI is trading at a discount to NTA, offers a +5% distribution yield with solid underlying portfolio metrics and near/medium term growth opportunities via the development pipeline."

PeopleIn Ltd (ASX: PPE)

Finally, this workforce management company is one of the broker's top picks. It has put an add rating and $5.15 price target on its shares.

The broker is pleased with the way the company has been balancing its portfolio through acquisitions, sees scope for more, and believes it is well-placed for growth as COVID headwinds ease.

Morgans said: "We expect a solid interim result on 18 February and organic growth to accelerate over the 2H22 as COVID challenges normalise. Current international candidate sourcing initiatives should deliver benefits in FY23. With a solid organic growth outlook, potential for further accretive M&A and an undemanding valuation (FY23F PE of ~11.5x), we maintain an Add rating."

The post Morgans names 3 of the best ASX shares to buy today appeared first on The Motley Fool Australia.

With the COVID-19 Omicron variant sneaking in at the end of the month, November ended up a bloodbath for ASX travel shares.

The Motley Fool calculated that out of 12 travel-related stocks, just 3 ended the month higher than it started:

Let's take a look at the trio of lucky ASX shares that had a positive November:

The airline that's taking off during the pandemic

Alliance Aviation has been a favourite among professional investors the past year as it's been one of the few airlines to grow during the pandemic.

The small operator did well from providing wet leases with its larger rivals, which is best described as an outsourcing agreement.

It seems Alliance shares did most of its climbing early in November while Omicron was merely a letter of the Greek alphabet.

On the morning of Monday 8 November, the company revealed Qantas had exercised further options on its wet leasing contract.

That week, the stock climbed 4.51%.

The shares then held steady the last few days during the Omicron panic to not lose their earlier gains.

According to CMC Markets, 4 out of 5 analysts rate the stock as a "strong buy", with the 5th considering it a "hold".

Will Sydney Airport's takeover complete?

Sydney Airport also did most of its heavy lifting on 8 November.

The shares rocketed 2.79% on that day after it accepted a revised $8.75 per share takeover offer from the Sydney Aviation Alliance consortium.

The airport understandably lost a lot of those gains on Monday on the back of Omicron-triggered border closures, ending November 1.34% higher than it started.

Due to the pending acquisition, most analysts rate Sydney Airport shares as a "hold", according to CMC Markets.

The deal is still subject to shareholder approval and, critically, requires a green light from the watchdog Australian Competition and Consumer Commission (ACCC).

The shares are starting December at $8.30.

No one knows what's happening with Auckland Airport shares

Auckland Airport is another stock that made most of its gains by 8 November.

The shares rocketed 5.33% over the first 8 days of the month, but gave up most of those gains in the last fortnight.

The airport stock ended just 0.27% in the positive for November, which was still good for third place among travel shares.

According to CMC Markets, analysts are divided on Auckland Airport shares. Three out of 10 rating them as a "strong buy", but 4 rate them as "hold" and 3 are urging clients to sell.

The post 3 best-performing ASX travel shares in November appeared first on The Motley Fool Australia.

Ask a Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Joel Fleming – portfolio manager at Yarra Capital Management's Australian equities team and the UBS Yarra Microcap Fund – explains the risks and rewards of investing in ASX microcap shares.

MF: How would you describe your fund to a potential client?

JF: Microcap investing is all about trying to drive long-term capital growth. That's what we're trying to achieve for our investors.

We offer a diversified portfolio, meaning we invest in stocks from all areas of industry and at various stages of their development.

It is a higher risk area of the market. There's less analyst coverage and fewer professional investors focused on this area.

But for us it really is about taking a long-term view. We try to find companies today that are undiscovered, that have great management teams and that have a great business plan. And it's about being able to execute that plan over the next 3 to 5 years, enabling that company to turn into a really meaningful business within their industry, and creating great returns along the way.

ASX microcap definitions can vary quite a bit. What sort of market cap are you targeting?

Stocks need to be below a $250 million market cap when they go into our portfolio.

Importantly, though, we're not forced sellers just because a company goes into an index or reaches a particular size. We're looking for those truly great businesses that continue to reinvest in themselves, continue to create opportunities and grow into their market. Being able to go on that journey with them allows you to get the most out of these individual decisions, when you've done so much work to understand the business.

That's a differentiating factor in our part of the market. You can really get behind some of these businesses that have a long life cycle in terms of their development.

Is there a minimum market cap that you won't go below?

Approximately $30 million is our lower end.

I draw the line there because it's important that I can offer an investor today something that I should be able to offer them when the fund is a lot bigger.

We are doing a lot of work around that threshold, though, where it's not quite the time to pull the trigger for portfolio inclusion, but where we are familiarising ourselves with the individual opportunity.

Atop the points you mentioned earlier, are there other specifics you look for in ASX shares that could trigger a buy signal?

We think it's critical to do a lot of detailed due diligence ourselves to really understand an opportunity.

Often in smaller companies, everyone is very passionate about their business. And many of them can tell you a fantastic story about why it's a great investment.

Our job, though, is to try and verify the investment thesis. To say, this looks to be a wonderful idea, but is this the team to really make the most of this opportunity? What are going to be the key issues they might face?

Inflection points in a company's development and its critical milestones are key for us. It can be something like the acceptance by a customer, someone giving them that first important contract. That's often the catalyst.

What type of risk management do you employ, and what factors can see you exit a position?

The first point on risk management is that no single position is more than 5% of the portfolio. That means we're managing position sizes and trimming when a business is performing really well.

In terms of selling, in microcaps, sometimes it just doesn't work with that inflection point you were looking for. There are occasions when something may have changed in terms of the competitive or regulatory environment, resulting in our reason for investing being invalidated. At that point, we will cut and run because our thesis has changed.

The other thing is if a business is taken over. There's a lot of M&A today, so that can be a reason a business will exit the portfolio.

And sometimes a stock has hit its valuation. It's important here, when we've captured a lot of value for our unitholders, that we ask whether we are thinking too optimistically about the blue sky and where they might go from here. So, that valuation is also important in terms of when to trim or actually exit the position.

Which sectors look promising to you over the next 12 months?

We like to take a longer-term view. But in the short-term, New South Wales and Victoria are opening up. People want to get outside, have experiences, and do the things they haven't been able to do.

The spend that comes from that in terms of tourism activities, eating out and all of those types of things is one area that will be quite positive. Savings rates are very high and a lot of fire power exists.

Now these things have been discussed a lot. But the way I look at it is a lot of businesses have been acquiring the sales and marketing for whatever they're trying to achieve. So that ability to fly around again, that ability for sales people to get in front of clients and have a real conversation and build up that momentum is an area where I most look forward to seeing the results.

Particularly if you're trying to grow your business in the United States or Europe. It's been hard to do, hard to grow those relationships [until] the opening up of international travel and executives get out on the ground and really restart things.

Which ASX shares do you think will outperform in this scenario?

I like a business based in New Zealand called Eroad Ltd (ASX: ERD). It's a telematics provider. When you look at the amount of data available related to driver safety, compliance, the ability to pay taxes within a complicated tax environment, they've got a very good product.

They're very strong in their core New Zealand market, but Australia and the US are emerging markets for them. And on the sales cadence and being able to get out there again, I think it's a stock that looks really interesting from here.

Then there's Alliance Aviation Services Ltd (ASX: AQZ), a really well run business, with 2 drivers.

First, you've got the mining industry. A lot of these people don't work next door to where they live. Alliance is in a strong position in that market.

Then there's the opportunity – as people travel differently and the larger airlines are more focused on their traditional routes – to have a big part to play in some of those regional operations. And they're really set up to do well there.

Are there any sectors you think will underperform over the coming 12 months?

If you're looking at streaming services, people are likely to lose 1 or 2 of those as they can go and be out and about again. There's been lots of areas, like in parts of retail… where a lot of consumers have spent their money and are more likely to spend in other parts of the market.

There are other sectors where we can find it difficult to validate the investment propostion. Early stage biotechs are ones we typically find where it's very challenging to add value. That's also often the case with very early stage explorers in oil and gas, or minerals.

We like to buy businesses where we think there's an opportunity for them to create real value. And when we look at the risks where we can understand that in the context of the broader portfolio.

If the market closed tomorrow for 5 years, which stock would you want to hold?

This is a really good question to think about.

I would say Pacific Smiles Group Ltd (ASX: PSQ). It's very hard to disrupt going to the dentist.

This is a growth business that has an excellent footprint, and offers a service that is very difficult to substitute. It has a reasonable number of [dental] graduates coming out of university and offers them a good framework, so they don't have to go out and do all the hard things involved with setting up a business.

I'm confident that [in 5 years], Pacific Smiles will be significantly bigger than it is today as they roll out their footprint. Their model today is working really well.

What do you see as the biggest threat for ASX investors over the next year?

Inflation is obviously interesting, and the great debate over whether it's transitory or perhaps more permanent.

Interest rates have provided the market with a very strong tailwind. At some point, the outlook must level if not look to move up. Even though we all know it's coming at some point, we're uncertain how the market will react to that when it becomes more real.

And what do you see as the biggest opportunity in the year ahead?

The best thing about microcaps is that there's always an opportunity.

We've got a huge investable universe. We've got companies that are small and nimble and are looking for opportunities. They're not sitting there trying to protect a legacy business. Instead, they're saying: "How can I solve a problem? How can I give that customer a better proposition tomorrow than what they're getting today?"

That's what exciting with microcaps. It doesn't matter what's happening on the broader macro, there's always a little microcap business out there that's doing something interesting. And they're not on the front page every day. They don't have 26 institutional investors on their register, so they're often not very well understood.

M&A is also a key theme; microcaps are a great hunting ground for M&A. There are lots of larger companies that are feeling quite confident and have strong balance sheets. I think this will continue to be an area where we'll see a lot of activity because often it's cheaper to buy than build. And we've certainly seen a good run of it through this year.

(Direct investors can access the Yarra Microcaps Strategy through the UBS Yarra Microcap Fund, for which Yarra Capital Management is the delegated investment manager. You can find out more about this fund here.)

The post Two small-cap ASX shares primed for the reopening: fund manager appeared first on The Motley Fool Australia.

There are a group of ASX shares that brokers really like. The fact that so many analysts like these stocks could mean they are an opportunity.

These businesses are supposedly at good value and may be able to produce good returns over the next 12 months according to multiple brokers.

However, there is a chance that all of the brokers are wrong at the same time.

Here are two of those ideas:

Alliance Aviation Services Ltd (ASX: AQZ)

Alliance describes itself as Australasia's leading provider of contract, charter and allied aviation and maintenance services.

Its clients come from industries like mining, energy, tourism and government sectors. The business is planning to have more capacity in the coming years. It has 25 additional E190s scheduled to be added to the fleet by the middle of 2022. The expansionary capital expenditure is $176 million which will result in an increase of up to three times annualised flight hours by the end of FY22.

Total flying hours for the year were stable at 37,913 hours and revenue increased 3% to $308.7 million. However, profitability increased over the year. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 15% to $90.5 million and underlying profit before tax increased 25% to $51 million.

The ASX share's management said that it has a positive outlook for FY22 with organic growth opportunities geographically and across the majority of revenue streams. Resource and energy sector services are expected to increase organically across the network during the year and will benefit from the capacity that five additional Fokker aircraft will bring.

It also said that it will continue to focus on cost management during the year, ensuring profit margins are maintained or increased where possible.

It's currently rated as a buy by at least three brokers, including Morgans which has a price target of Alliance of $5.10.

IOOF Holdings Limited (ASX: IFL)

IOOF is another ASX share that's well liked. Currently there are at least four brokers that like it, including Credit Suisse which has a price target on the business of $5.20.

The broker is attracted to the fact that IOOF is now a lot bigger with its acquisitions, including MLC from National Australia Bank Ltd (ASX: NAB). Synergies from these acquisitions could help with earnings growth over the next couple of years.

IOOF generated $147.8 million of underlying net profit after tax from continuing operations in FY21. This was an increase of 19%.

The board decided to pay a FY21 annual dividend of $0.23 per share, which included 5.5 cents per share of special dividends. The ordinary dividend of 17.5 cents per share translates to a trailing grossed-up dividend yield of 5.4%.

In FY22, IOOF is expecting to deliver annualised run-rate synergies of between $80 million to $100 million. It's also expecting substantial improvement in financial performance of the advice business by leveraging technology and capabilities across the advice business and increasing revenue and cost efficiencies.

In the longer-term, the ASX share's management said that it "continues to see significant opportunities through expanding its addressable market and changing demographics". The business is aiming for growth of earnings and dividends.

The post 2 ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia.

While the Qantas Airways Limited (ASX: QAN) share price is down 7.64% this year, the Alliance Aviation Services Ltd (ASX: AQZ) share price is in the green.

The company has been having an off couple of days, down over 5% yesterday and a further 0.36% – resulting from the release of its FY21 full-year results. Alliance, unlike Qantas, made a profit this year, and a rising one at that. For the year it made $51 million, which is up 25.3% on the prior corresponding period (pcp).

Let's take a closer look.

Alliance is overperforming the Qantas share price

For FY21, Alliance had the following results:

• Revenue up 3% on the pcp to $308 million.
• Underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $90.5 million – up 15% on the pcp
• Operating underlying cashflow of $75.9 million, which is 73% higher on the pcp.
• Underlying earnings per share (EPS) 22.6 cents a share but no dividend paid for the year.

Alliance is a Queensland-based airliner that specialises in charter flights and group travel. While first established to meet the needs of fly-in, fly-out (FIFO) mine workers, it has since expanded into government, tourism, and corporate travel. The Australian reports that Alliance's service has even been sought by the NRL and the Australian Open in their attempts to keep their competitions running during the COVID pandemic.

The company has a fleet of 4 aircraft, which have been in high demand during the pandemic as people struggled and/or avoided commercial flights. This has seen the Alliance share price rise to record highs, which is the converse of the Qantas share price experience during this global viral outbreak.

What did Alliance management say about the results?

Alliance Managing Director, Scott McMillan, said

Alliance has produced a record result at a time when we are investing heavily in supporting the growth of the business. The underlying business, utilising the Fokker fleet, continues to reap the benefits of past planning and investment and is the financial and operational foundation on which the E190 expansion has been built. This expansion program will provide the Company with an increase in annualised flight hours of up to 3 times by the end of FY2022.

Alliance and Qantas share price snapshot

Over the past 12 months, the Alliance share price is 18.5% higher while the Qantas share price is 26% greater. The contrast between the 52-week figures and the year-to-date figures are stark and show how quickly things can change.

At the same time, the S&P/ASX 200 Index (ASX: XJO) is 14.1% higher year-to-date and up 25.2% over the year.

Alliance Aviation has a market capitalisation of $666 million and Qantas has one of $8.5 billion.

The post Move over Qantas (ASX:QAN). This ASX airline share is profiting during COVID appeared first on The Motley Fool Australia.

With that in mind, we bring you the 5 best performing ASX transport shares of the 2021 financial year (FY21).

As a benchmark to their performance, we use the All Ordinaries Index (ASX: XAO). From 1 July 2020 through to 30 June 2021, the All Ords gained 25%.

FY21 was a tough year for ASX transport shares, with many suffering from COVID driven border closures and social distancing measures. As you'll see below, only 1 of our 5 top performers beat the benchmark.

Alliance Aviation Services Ltd (ASX: AQZ)

Topping the list – and the only ASX transport share to outperform the All Ords in FY21 – is Alliance Aviation Services. The company finished the year up 53.2% at $4.55 per share.

Based in Queensland, Alliance Aviation provides aircraft charter and group travel, including services to fly in, fly out (FIFO) workers in remote regions. Unlike larger airlines dependent on international and interstate travel, the company saw increased demand from the range of issues thrown up by the global pandemic.

With just under 160.5 million shares in circulation, Alliance Aviation has a market cap of $690.1 million. The company pays a 2.7% dividend yield, fully franked.

Qantas Airways Ltd (ASX: QAN)

The second best ASX transport share for the year, with a share price gain of 20.4%, is Qantas.

Founded in Queensland back in 1920, Qantas is the world's third oldest airline still in operation. It runs 2 complementary airline brands – Qantas and Jetstar – offering regional, domestic and international services.

Despite international travel virtually grounded in FY21, and even much of its interstate routes jeopardised by rolling state border closures, investors appear to have faith in the airline's longer-term value.

Qantas finished the year trading at $4.66 per share with a market cap of $9.1 billion. The airline pays a 3.1% dividend yield, 100% franked.

Air New Zealand Ltd (ASX: AIZ)

Coming in at number 3, we have Air New Zealand, which saw its share price lift 14.4% over the financial year gone by.

Founded in 1940, the company operates domestic and international services. It listed on the ASX in 1997 and is dual listed on the New Zealand Stock Exchange under the ticker (NZE: AIR).

While underperforming the benchmark, as with Qantas, investors appear to believe the ASX travel share has a strong future ahead of it once the pandemic is finally brought under control.

Air New Zealand ended FY21 at $1.44 per share with a market cap of $1.7 billion. It pays a hefty 7.3% dividend yield, unfranked.

Auckland International Airport Ltd (ASX: AIA)

Making the list as the fourth best performing ASX travel share is Auckland Airport, with shares closing up 13.2% in FY21.

As with our number 3 performer, Auckland Airport is also dual listed on the New Zealand Stock Exchange under the ticker (NZE: AIA). The company listed on the ASX in 1999, and with a market cap of $10.5 billion, it is among the largest listed companies in New Zealand.

Auckland Airport closed on 30 June at $6.76 per share. It pays a dividend yield of 1.4%, 43% franked.

Qube Holdings Ltd (ASX: QUB)

Finally, coming in at number 5, is Qube Holdings, which finished off the year with shares up 10.5%.

Now Qube differs from our first 4 ASX travel shares as the company's not primarily involved with moving people, but rather things. Among its activities, Qube handles road and rail transport, and it has a 50% holding of Patrick Terminals, among the largest container terminal operators in Australia.

Qube finished FY21 with a share price of $3.17 and a market cap of $5.7 billion. The company pays a 1.6% dividend yield, fully franked.

The post Here are the 5 best ASX transport shares of the 2021 financial year appeared first on The Motley Fool Australia.

ASX travel shares arguably copped the biggest blow from the COVID-19 pandemic.

Every country suddenly found itself fighting an invisible enemy. And one of the bluntest ways to control the spread of the virus was to close the borders.

Australia, as an island nation, was one of the first to go down this route.

Then Australia, as a federation, saw its constituent states shut their borders to each other. 

So not only did the travel industry find itself with no international revenue, domestic sales dried up as well.

But this catastrophe has also meant some travel businesses were in for a spectacular recovery out of the crisis over the 2021 financial year.

The 3 best-performing travel shares from the past 12 months out of the All Ordinaries Index (ASX: XAO) were:

• Sealink Travel Group Ltd (ASX: SLK): up 115.5% in the 2021 financial year
• Corporate Travel Management Ltd (ASX: CTD): up 111.5%
• Alliance Aviation Services Ltd (ASX: AQZ): up 53.2%

Eley Griffiths portfolio manager Nick Guidera told The Motley Fool that stocks like these showed just how productive it was to put money into travel the past 12 months.

"If you had invested in Sealink and Corporate Travel as the peak of the pandemic infection in Australia was subsiding (June 2020), you would have more than doubled your money," he said. 

"The travel subsector has significantly outperformed both the consumer discretionary sector and the broader S&P/ASX 200 Index (ASX: XJO) by more than 90% during the past year."

Sealink still presents a 'significant opportunity'

Transport and tour provider Sealink enjoyed several boosts during the 2021 financial year, according to Guidera.

"Sealink has benefited from a number of factors including the renewal of its key bus contracts in [Western Australia], [South Australia] and Singapore, which the company acquired as part of the Transit Systems acquisition in late 2019," he said.

"At the same time, its domestic tourism assets and government-backed maritime routes have seen a surge in demand as Australian's have been forced to holiday at home."

Despite doubling its value, Guidera reckons the stock has more climbing to do.

"I think there is a significant opportunity in Sealink. The Transit Systems earnings are broadly de-risked and a significant pipeline of future bus contract opportunities — more than $500 million — are expected to be potentially awarded in the coming months," he told The Motley Fool.

"Tourism assets provide continued leverage to domestic tourism, as well as future upside when international tourists return. The stock is trading broadly in line with 12-month averages despite a significantly improved outlook."

Corporate Travel looks expensive now

As the player with the best balance sheet in the industry, Corporate Travel was a darling among ASX investors, according to Guidera.

"[It] was and is in a position to reach a break-even point faster than its leisure competitors."

The company even had enough money to acquire US player Travel & Transport Inc last year.

"CEO Jamie Pherous didn't waste a good crisis and used his balance sheet to acquire a sizable business in the USA, which will bring scale to the existing operations at a very attractive price," said Guidera.

"Corporate Travel is well placed to take advantage of the significant growth in US airline passenger numbers month-on-month, as a vaccinated US economy continues to reopen."

But the doubling of the share price in the past year has put Guidera off somewhat.

"On near-term earnings forecasts, [travel] agents such as CTD look expensive," he said.

"However, on FY23 numbers, which many are hoping is more reflective of 2019 conditions, valuations are more appealing."

Alliance's growth could come regardless of economy

The little airline services provider is a favourite of Montgomery Investment Management chief investment officer Roger Montgomery.

Like Corporate Travel, Alliance bought up useful assets last year at a pandemic discount.

"Last year, Alliance took advantage of slumping global travel, announcing it would spend just $197 million to acquire 30 Embraer E190 aircraft, lifting the number of planes in its fleet to 66," he said in a blog post.

"These prices are cents on the dollar of the original capital cost of the assets. This is Alliance's key competitive advantage, great operational on-time performance from the lowest capital cost aircraft in the market."

The company 'wet leases' aircraft to the big rivals like Qantas Airways Limited (ASX: QAN) and Virgin Australia.

"Wet leases are agreements between two airlines, where the lessor agrees to provide an aircraft, crew, maintenance and insurance to the lessee in return for payment on the number of hours the aircraft is operated, irrespective of how many passengers are on the plane or the price they paid for their seat."

Montgomery is convinced the stock will continue its ascent from the financial year end price of $4.55.

"We believe it is worth in excess of $5.00 per share."

The post 3 best ASX travel shares of financial year 2021 appeared first on The Motley Fool Australia.