Saga considers possibility of cruises and tours suspensions till 2021
Published on Thursday, April 2, 2020
Saga has suspended dividend payments and started planning for a possible extended suspension of its cruise and tour operations up to January next year.
In a trading update this morning, the over 50s holiday specialist said it has started planning for a number of scenarios due to the impact of the coronavirus pandemic on holiday plans.
“Given the significant potential impact of Covid-19 on the travel industry, the group has considered scenarios for extended suspension of cruise and tour operations, including full cancellation of all travel departures over six months, followed by a slow recovery.
“The Group has also considered a further, more severe scenario that assumes the cessation of cruise and holidays trading until January 2021,” it said.
It said that disruption caused by the coronavirus at shipyards might also delay deliver of its second new ship, Spirit of Adventure, which had been due to enter service this August.
“This has been considered within planning scenarios and is not anticipated to significantly change the group’s financial position,” Saga said.
Group chief executive Euan Sutherland said: “Saga is ready to start sailing as soon as the travel advice changes.
“Today we have outlined some prudent planning scenarios to investors – they are not a prediction as to when travel will resume.”
Saga expects its underlying pre-tax profits for the last financial year up to the end of January 2020 to reach £110 million, which is in line with expectations. At that point, forward cruise bookings for this year were 80% of its full target and ahead of expectations.
The company said it has now repatriated almost all of its customers who were overseas at the time the Foreign Office issued an advice to Britons to avoid all but non-essential travel.
Sutherland said: “In a year of change, Saga has made significant operational progress and strengthened the management team to ensure the business is positioned to deliver for our customers and members and for investors.
“Our insurance and cruise businesses made good progress against the priorities we set out in April and we have moved to significantly strengthen our financial position, reducing debt and operating expenses and improving cash flow.
“Saga insurance remains largely unaffected by Covid-19, however along with all other travel businesses, our travel business has been significantly impacted.
“We have acted quickly to ensure the health and wellbeing of our customers and colleagues and, following the government’s advice on cruise ship and air travel, we have suspended our cruise and tour operations.
“We have also worked with our banks to agree temporary amendments to our debt covenants. We have significant available liquidity and can consider a range of further mitigating actions across the group.
“Saga is a strong brand, with loyal customers and where we offer really differentiated products, underpinned by excellent service, our businesses do well and have potential to do better.”
However, he admitted that Saga had become ‘inefficient, lost its tight focus on customers and had under invested in digital, data and brand’.
“We have started the work to make the changes necessary for us to be able to deliver the truly differentiated products and services our customers expect from us,” he added.
“Against the backdrop of Covid-19, the outlook is uncertain, but we remain confident that the Saga brand, and our insurance and travel businesses have a successful future ahead.”