Saga suffered a pre-tax loss of £55.5 million in the half year to July 31 after a £60 million impairment charge in its travel business as Covid-19 hit its operations.
The over-50s travel and insurance specialist confirmed a £150 million fund raising exercise including a £100 million investment by former owner Sir Roger De Haan.
The group said: “Having taken significant actions to reduce operating costs, we expect the cash ‘burn’ for the travel businesses to be in a range of £6 million to £8 million per month in the second half of the year, including all operating and financing expenses.”
Saga’s travel interests have been paused since mid-March due to the pandemic.
The group is ready to resume cruises this year, but its tour operations are not due to recommence until April 2021.
The overall workforce was cut by 36% in the six months to 2,500.
The company expects to add back up to 500 roles “in time” as travel resumes, leaving permanently lower headcount of 23%.
“The group continues to monitor the impact of the Covid-19 pandemic on its business and has taken actions to reduce its costs, in particular in the travel business,” the company said while issuing interim financial results.
“While the future impact of Covid-19 remains highly uncertain, there is an increased risk of disruption of the cruise and tour operations businesses well into 2021.
“While the group has significant available liquidity and is expected to remain in compliance with all banking covenants through at least the next six months in all reasonable scenarios and before any additional actions are taken to improve financial flexibility, such an outcome would have a potentially significant adverse impact on the position beyond this date.
“Specifically, there is a risk that the group would not comply with all of its financial covenants as at 31 July 2021 in the absence of such further actions being taken.”
Referring to cruise, Saga said its “number one priority” is a safe return to service as soon as government restrictions on the cruise industry are lifted.
“We are working closely with the government and all the relevant authorities to ensure provision of the very best safety operating protocols for a Covid-19 world.
“Our transformation of cruise means we operate the newest ships on the seas. These are boutique ships that are technologically advanced and able to offer our guests the highest levels of safety, with fresh air for all cabins, control of air-conditioning airflow in corridors and public spaces, ionisation and ultra-violet filter capability further protects guests as well as all table-service restaurants.
“Our ships are mid-size, enabling social distancing more easily and realistic capacity management, along with enhanced guest protection ahead of boarding and enhanced medical facilities and staff on board.
“Saga Cruise has always operated an end-to-end bubble for those travelling to and from our ships – with a dedicated car service picking up guests from their homes and driving them to the ships, and the same on return – and we only sail from UK ports.”
Second new ocean ship Spirit of Adventure will soon be launched.
“Customer retention for those whose cruises have been cancelled because of Covid-19 has been consistently strong, as are 2021 bookings,” the company added.
“The new management team has confidence in the financial metrics established with Spirit of Discovery from August 2019 being re-established, over time, as sailings resume.
“We are extending our proposition to river cruise from 2021 and an intended expedition cruise proposition from 2023.”
A significant proportion of customers continue to show their loyalty, with over 65% of customers retaining their bookings with cruise, Saga added.
New management has “reset” Saga’s tour operations during the Covid-19 lockdown.
“Having repatriated more than 3,000 customers in March, we set about establishing a lower cost, smaller business and planning for a resumption of operations based on a higher-quality, differentiated product portfolio that is consistent with the Saga brand,” the company said.
“This will emphasise peace of mind, unique and aspirational holidays tailored for our customers and the delivery of exceptional experiences.
“The launch of the 2021 season is taking place in early autumn 2020, with a return to the DNA that created Saga Holidays success for many years.
“Titan Travel has also improved its focus and reduced its cost base, while taking the same high-quality measures around Covid-19 safety and peace of mind for customers.
“Both tour operations businesses are planning for a resumption of operations from April 2021.”
Group chief executive Euan Sutherland said: “We have conducted a comprehensive review of strategy and have developed a plan which we believe will strengthen our brand, improve our focus on our customers, deliver exceptional experiences for them, and return both our Insurance and travel businesses to growth.
“The capital raising, supported by Sir Roger De Haan’s cornerstone investment, will allow us to build on our actions to date by enhancing our resilience and financial strength.”
The firm revealed “a new creative brand essence” under the Experience is Everything banner and a single group-wide customer digital data platform.
“We will drive awareness and consideration of a refreshed and contemporary Saga with a new integrated multi-year brand campaign planned to launch in 2021.
“Our plans for this are well advanced and have tested very positively with our target audience. We have earmarked a brand advertising fund within the current plan to support this,” the company added.
De Haan, who is returning to the company as chairman, said: “Saga is a special company and I am very optimistic about its future as a result of the strategy that is being outlined today.
“Euan Sutherland and his new management team have shown that they really understand the business and they are already being successful.
“Saga has always flourished when it has put its customers at the centre of everything it does and when it has offered good value products designed specifically for them and delivered with great service. I am proud to be playing my part in ensuring that Saga is back on the right track.”