The Webjet Limited (ASX: WEB) share price dipped into negative territory in Monday's session following news of an extended lockdown in Australia's 3rd most populous state.
At market close, the online travel agent's shares finished down 0.40% to $4.99.
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COVID-19 lockdown weighing down Webjet shares
A catalyst for Webjet shares edging lower could be the resurgence of COVID-19 cases across the east coast of Australia.
According to ABC News, the Queensland government has extended the state's current lockdown until 4pm on Sunday 8 August. This comes as the state recorded 13 new local COVID-19 cases. Contact tracing is underway for various locations around the state's southeast.
Meantime, New South Wales is battling its own COVID-19 problems, reporting 207 new local infections today. Most worryingly, it appears the virus's Delta strain is spreading within communities.
The developments have impacted Webjet shares of late as state governments enforce hard border lockdowns. New South Wales isn't expected to lift restrictions until sometime in September and that could possibly be further extended.
Fortunately, Webjet still has substantial cash reserves to survive the ongoing crisis that's put the travel industry into a tailspin.
At its most recent update on 19 May, the company had a strong capital position. Pro forma cash stood at $431 million, with an average cash burn rate of around $5.5 million per month. This gives the company the ability to weather the unpredictable nature of COVID-19 for the next 6.5 years without raising additional capital.
Nonetheless, Webjet will be hoping for a quick recovery in Queensland and New South Wales. The travel sector had begun to slowly pick up in domestic markets. Also, New Zealand previously offering quarantine-free travel to Australians provided a short-lived boost to limited international travel.
The company is expected to release its financial results for FY21 on 18 August 2021.
Webjet share price summary
During the last 12 months, Webjet shares have accelerated by more than 76% since hitting near COVID-19 lows. The company's share price has gradually been trending upwards trend but is still a long way off 2019 levels.
Currently, the company's share price is sitting just above the middle of its 52-week range of $2.63 to $6.33.
Based on valuation grounds, Webjet has a market capitalisation of around $1.89 billion, with approximately 379 million shares outstanding.
