Saga to take £15m hit as it suspends cruises due to Covid-19

Over-50s specialist Saga has suspended operations of its cruises until 1 May - a move that will dent profits by up to £15m - following government advice for people aged 70 and over and those with pre-existing conditions not to travel on cruise ships due to the coronavirus outbreak.

In a statement on Friday, Saga said the health and safety of customers and colleagues was its "number one priority" and its customer service teams will be in touch with cruise customers who were due to travel in the next six weeks to offer them a full refund or a credit for a future departure.

The company said demand for its cruises has been "very positive", with bookings of around 80% of the full year revenue target. Cancellations have risen in recent weeks, it said, but as of 11 March, the average booked load factor for the remaining five cruise departures in March was 79% and the average booked load factor for five April departures was 85%.

Saga expects the temporary suspension to reduce cruise pre-tax profit by between £10m and £15m. Related advance customer receipts for this period are £22m, it said.

"While the travel environment remains uncertain, the group continues to have significant available liquidity, underpinned by a £100m undrawn revolving credit facility, £33m of cash at the end of February and the strong cash generation of the Insurance business.

"As previously noted, the insurance business is not expected to be significantly impacted by COVID-19 and has had a good start to the current financial year."

It noted that the two disposals recently announced are expected to generate an additional £37m of cash proceeds in the first half.

"There are a range of further mitigating actions the group will take including additional cost efficiencies and reducing discretionary spend."