The Webjet Limited (ASX: WEB) share price was one of the worst performers on the S&P/ASX 200 Index (ASX: XJO) in early trade.
The online travel agent's shares dropped as much as 6.5% to a multi-year low of $2.33 at one stage.
Webjet's shares have since rebounded and are now trading approximately 1% higher for the day.
Why has the Webjet share price been volatile today?
Investors were selling Webjet's shares this morning amid concerns over the collapse of Virgin Australia Holdings Ltd (ASX: VAH).
This morning the embattled airline entered voluntary administration. It made the move with the aim of recapitalising the business so that it emerges in a stronger financial position on the other side of the COVID-19 crisis.
This follows its unsuccessful attempts to secure financial assistance from a number of parties, including State and Federal Governments, to help it through the crisis.
Its collapse sparked fears that it could financially impact Webjet. However, much to the relief of investors, this has been refuted by management.
This morning Webjet advised that it has "enjoyed a strong long-term relationship with Virgin and sees it occupying a vital position within the ongoing Australasian travel landscape."
However, it explained that it does not have a material financial exposure to Virgin should an administrator restructure the airline or elect to cease trading.
It said: "Webjet books airfares on behalf of its customers as agent and is not the provider of the service. Webjet is working closely with its customers and on their behalf to process refunds/credits directly with all airlines who are no longer able to honour prepaid tickets, including Virgin."
The company also stressed that it remains confident in its future despite the pandemic.
"While the travel industry will be impacted by Covid-19 for some time, Webjet considers that it will emerge with a strong competitive position given the diversity of geographic markets in which it operates, its diverse product offers and its capital position following the recent capital raise," it explained.
