The operations of Saga Holidays and Titan Travel are to be combined.
The group said it was restructuring its tour operations “to deliver growth and create lower-cost, more agile, customer-focused business, ready for resumption of international travel”.
The over-50s specialist disclosed last week that it will be working with “a smaller” number of agents to enable it to “build stronger relationships” with those partners. Titan later said the trade is “part of our recovery”.
In a trading update today, Saga said: “Our tour operations business – comprising Saga Holidays and Titan Travel – like the rest of the market, has been significantly impacted by Covid-19.
“We are completing the restructuring of our tour operations business to position ourselves for growth and create a lower-cost, more agile and dynamic operation which is focused on the changing needs of our customers.
“We are combining the operations of Saga Holidays and Titan Travel. This will maximise efficiency in touring, where the product offerings are highly complementary, and we will create a new hotel stay proposition to be launched later in 2022.”
Management of the over-50s company’s river cruise operation is also being moved to ocean cruise.
“These actions place us in a strong position as travel restrictions ease and pent-up customer demand builds,” Saga said.
“By initiating these changes, we expect to incur ‘below the line’ restructuring costs in the range of £10-15 million in the year ended 31 January 2022, with around two-thirds of this amount relating to impairments of IT assets which are non-cash in nature.”
Saga’s cruise arm is on course to report pre-tax losses of up to £50 million as its travel businesses continued to be affected by the pandemic.
However, company said cruise generated positive earnings [ebitda] in the second half of 2021, with a “strong” load factor of 68%.
Issuing the trading update for the period from August 1, 2021 to January 26 this year, Saga said the underlying loss before tax for its cruise division is expected to be £45-£50 million after ship depreciation and financing costs.
The company reported strong 2022-23 cruise bookings, with a load factor of 86% for the first half and 73% for the full year.
Saga said: “Given underlying disruption and restrictions in travel through the second half, the group is expected to make a small underlying loss before tax for 2021-22.
“Although mindful of potential for continued uncertainty, we expect to return to profit in 2022-23.”
A full strategic update will be included with Saga’s preliminary results announcement on March 23.
Group chief executive Euan Sutherland said: “Saga has delivered a successful second half of the financial year with our Insurance business remaining in growth and delivering positive momentum across all key metrics, while our cruise ships resumed their international itineraries.
“With a stronger Insurance business and progress being made in transforming our travel business, our turnaround strategy is working well.
“While Omicron has impacted travel bookings through December and January, our outlook for cruise in 2022-23 and beyond is positive.
“We approach the future with confidence, having demonstrated our ability to manage our way through recent challenges.
“We remain confident that the strength of our brand, our management team and our strengthened financial position will now allow us to return the business to sustainable growth, creating long-term value for our stakeholders.”