Jetset Travelworld has recently released encouraging results for the financial year to 30 June 2010, given the bottom-line impact of its proposed merger with Stella Travel Services.

Jetset reported $8.7 million in profit after tax for FY10, down 45 percent from FY09. However, the company was quick to note that much of its profitability had been consumed by $4.5 million in costs associated with the proposed Stella merger.

In its presentation to investors on 10 August 2010, Jetset highlighted that the $19 million Profit Before Tax (PBT) was attributable to improving trade conditions and strict cost control by the company.

PBT in the second half of FY10 was 59 percent higher than PBT in the first half (before merger costs), Chief Executive Officer of Jetset Travelworld, Peter Collins said.

“This result reflects the emergent recovery in the travel and tourism industry and the stringent cost measures we have implemented to ensure overall profitability."

Jetset reported that Total Transaction Value (TTV) of $2.2 million was down 7.5 percent in FY10 compared to FY09, whilst net revenue had dropped 6.9 percent and PBT was down 20 percent (excluding merger costs).

However, when the second half of FY10 was compared to the first half, signs of post-global financial crisis were evident. Over this time, TTV was up 9.3 percent, and appeared to have stabilised.

The company said that their principal short-term focus was the proposed merger with Stella. As such, the Jetset Board suspended any final dividend for FY10, in order to retain sufficient cash reserves - reported at $114 million - to facilitate Stella’s integration.

Jetset currently has approximately 800 staff across 670 franchises. Stella has TTV of $3.3 billion, and 1,800 staff across 1,530 franchises.

Synergies from the proposed merger include: increased online competitiveness, reduction of unit cost distribution, stronger business partners and a stronger balance sheet. The focus of the merger will be on strict cost control, volume stimulation, sustainability initiatives, and integrating Stella.

An ACCC decision is expected on 2 September 2010, with shareholders able to vote at an Extraordinary General Meeting to be held on 6 September 2010.