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Thomas Cook collapse costs Saga £4 million
Saga has revealed it took a one-off £4 million hit from the collapse of Thomas Cook.
The over-50s specialist made the disclosure in a trading update on Tuesday (28 January), detailing the six months to 27 January 2020.
Saga’s full-year tour operator revenue is expected is expected to come in around 5% down on 2018/19, in line with half-year trading.
“We are seeing a much more resilient picture in those parts of the business where our customer proposition is truly differentiated, notably in escorted tours,” said Saga.
“The administration of Thomas Cook in the second half resulted in approximately £4 million of one-off costs, which will be taken below underlying PBT [profit before tax].”
By contrast, Saga said it would continue to build on the “excellent progress” made by its cruise division during H1.
This included launching the first of its two new-builds, Spirit of Discovery, which Saga had been warmly received by customers and was on course to deliver Ebitda (earnings before interest, tax, depreciation and amortization) in excess of £20 million for the second half of the year.
Meanwhile, the build programme for its second new ship, Spirit of Adventure, is said to be “on track and on budget” for delivery in August 2020.
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“We have forward bookings for 2020/21 of 76% of full year target levels, and we remain fully on track with our expectations for £40 million Ebitda per new ship,” said Saga.
“We continue to focus on disciplined execution of the strategy set out in April, against a backdrop of a challenging external environment in insurance and travel,” the company added.
“We expect full-year underlying profit before tax to be in line with our previous guidance.
“Our customers are responding well to what we are doing and it is clear the Saga brand remains strong with our core target market. There remains much to do to continue to improve our capabilities in all areas of the business and to respond to changing customer behaviours, across both insurance and travel.”
The mixed fortunes across its travel division comes after Saga on Monday (27 January) announced the return of Chris Simmonds to Saga Holidays.
Simmonds, a former Saga executive, left the business a decade ago to take up a role in the charity sector. He will assume the vacant managing director post at Saga Holidays after Maria Whiteman left last summer.
Simmonds will be tasked with transforming Saga Holidays and returning the business to growth.
Saga’s trading update did not expand on reports at the weekend the firm was pondering the sale of its escorted touring business Titan Travel.
James Chapple
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