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Webjet considers it important to set out its views on the potential impact of war in the Gulf in terms of the effect on our Australian business.

Webjet’s Managing Director, David Clarke, said "Like everyone, Webjet is hoping that there will be a peaceful resolution of the current tensions, but nevertheless consider it appropriate and prudent to advise the market of our views on the likely impact on our affairs and the general shape of contingency plans".

Specifically:

1. There is some evidence that the current threat is causing the discretionary international traveller to defer plans or change destination. So far, this is having no impact on current transaction values which reached a record in January, with February following a similar pattern.
2. Domestic traffic in Australia (approximately 65% of our total) is unlikely to be heavily affected. Some credence is given to the possibility that domestic traffic may in fact grow slightly as leisure traffic avoids areas of conflict.
3. International travel to destinations "at risk" will reduce sharply. The effect on our volumes, given the mix of business, is likely to be limited. A range of up to $200,000 per month is given as a guide which would translate to a gross profit impact of approximately $20,000 per month.
4. Recovery, if history is repeated in terms of travel, will be rapid and pent up demand is likely to see rapid restoration of growth further accelerated by special product offerings.

All of the above assumptions envisage that the conflict will be limited both regionally and of relatively short duration.

Against this background, Webjet has calculated a business model where, in a worst case scenario, travel is reduced over the next few months to 30th June by between $3.00m and $5.00m approximately with appropriate adjustments to variable costs (e.g. advertising).

In that event the model indicates a negative bottom line impact of between $200,000 and $400,000 for the same period.

Based on our current analysis of the above, we consider that the impact is within manageable proportions and the board will continue to closely monitor trends and events and move swiftly as may prove necessary.