Webjet CEO flags financial difficulties as Virgin cuts commissions
Updated ,first published
Travelers looking for cheap flights on Webjet may find fewer airfare deals in the future after Virgin Australia slashed the commissions it pays to the online travel agency to cut out the middleman and send consumers directly to its site to maximize sales.
The airline’s move adds to the headwinds for Webjet, which warned investors on Wednesday that operating conditions would remain “fluid and challenging” amid ongoing war in the Middle East, inflation pressures and low consumer confidence.
The company reported a 20 percent earnings decline for the year through March, struggling to keep up with technology and dealing with turmoil in its management ranks.
CEO Katrina Barry said following the release of the travel agency’s full year profits: “Virgin Australia, one of our key partners, have informed us that they will be significantly reducing their commission flows and commercial dealings with us from 1 July.” “They are still a valuable partner, but this has a significant impact.”
The news caused Webjet’s shares to rise rapidly. It was down 11.2 per cent to 44 cents by 11.56am AEST.
The company said it would cost Webjet $3 million in revenue if the airline had already reduced commissions in the 2025/26 financial year.
Virgin confirmed the commission cuts, saying it “regularly reviews its trading arrangements to ensure we remain competitive and continue to deliver value to our customers in a highly dynamic aviation market”.
The airline’s move comes at a difficult time for Webjet. In a statement to the ASX, the company said its underlying pre-tax earnings fell to $28.1 million in the 12 months to March 31, from $35 million in the previous year, due to a “challenging macro environment and softer trading conditions”.
“Look, it was a difficult year and one in which trade was at times softer than expected,” Barry said, as the Iran war and resulting oil price shock had a significant impact on holiday bookings.
“We continue to see leisure travel in Australia constrained by high airfares and low consumer confidence, and leisure travel moving internationally towards shorter-haul Asian and Pacific destinations,” he said. “The macro environment continues to be really challenging and we’ve had some internal challenges as well.”
Bookings across the group, including Trip Ninja and business travel units, fell to 1.4 million in 2026 from 1.5 million the previous year. Total transaction value fell from $1.5 billion to $1.46 billion.
In the online travel agency industry, revenue remained essentially unchanged from the prior year at $115.3 million.
The airline said domestic flight bookings fell 10 per cent, “affected by higher fares and pressures”, while international flight bookings rose 1 per cent “as growth shifted towards short-haul”.
This is “clearly a very challenging time for companies like Webjet,” said Jun Bei Liu of Ten Cap fund management.
He said the travel agency was squeezed by its dependence on domestic travel as well as Virgin’s commission.
“People aren’t flying as much as they used to (and) companies are probably a little tighter in terms of spending,” he said.
Webjet, a pioneer of online travel agencies, has seen its shares fall more than 50 percent this year due to concerns about its outlook.
The company has been at the center of speculation about both its leadership and future ownership.
Barry, who has been in the job for less than two years, said in March that he would resign after announcing the full year’s result as suitors continued to surround the company as a takeover target.
Corporate raider Gary Weiss’ investment firm Ariadne Australia and private equity firm BGH Capital have teamed up to take control of Webjet, bidding against a rival takeover bid from Helloworld.
Webjet rejected offers from both groups in February, causing its shares to decline. Ariadne and BGH have since backed off their co-ownership plans and dissolved their partnership.
Weiss was appointed to Webjet’s board of directors at the beginning of May. Last week, it was announced that Weiss would be interim chairman, fueling speculation that he might eventually submit another takeover bid.
The travel industry itself is also dealing with the effects of constant disruption caused by new marketing technology and shifts in consumer preferences.
While Webjet pioneered the online travel agency model in Australia, it ran the risk of being made obsolete by larger rivals such as Flight Center or the airlines themselves when marketing flight and holiday deals.
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