British travel group Saga today suspended cruises until the start of May over the escalating coronavirus outbreak, at a cost of between £10m and £15m to the company.
Saga’s move follows rival Carnival’s decision to suspend all Princess cruise ship voyages for two months.
One of its ocean liners, the Diamond Princess, was an early source of coronavirus infections. It entered quarantine off the coast of Japan for two weeks, during which time 700 passengers caught coronavirus.
“The health and safety of customers and colleagues is our number one priority,” Saga said in a statement today.
“We have, therefore, made the decision to temporarily suspend operations of our cruises until 1 May 2020. Our customer service teams will be in contact with cruise customers who were due to travel in the next six weeks to offer them either a full refund or a credit for a future departure.”
Saga claimed demand for cruises remained “very positive” despite the rate of Covid-19 infections increasing outside China. Bookings stood at around 80 per cent of Saga’s full-year revenue target, the operator said.
“While cancellations had increased in recent weeks, as of 11 March 2020, the average booked load factor for the remaining five cruise departures in March was 79 per cent.”
It added the average booked load factor for five April departures was 85 per cent.
But it will take up to a £15m blow from the six-week suspension, adding related advance customer receipts for the period total £22m.
While Saga’s shares initially fell, the FTSE 100’s bounce today lifted them 8.9 per cent higher close to midday.
Saga stressed it has “significant” available liquidity to deal with the coronavirus downturn. It has access to a £100m revolving credit facility and counted £33m in cash at the end of February.
It said its insurance business does not face a significant blow from coronavirus. Instead it “has had a good start to the current financial year”. Saga vowed to take extra measures against coronavirus, including cutting discretionary spending and finding cost efficiencies.
Saga’s decision came against a backdrop of turmoil for travel stocks caught in the coronavirus fallout.
US President Donald Trump’s 30-day travel ban from 26 European countries to the US saw airline stocks bleed red on the FTSE and Wall Street yesterday.
Routed stocks included Boeing, British Airways owner IAG, Lufthansa, Easyjet, American Airlines and Delta.
Worst hit was Norwegian Air, which suspended more than 4,000 gflights yesterday.
The travel ban led to airline bosses asking the government for financial support during the outbreak.