Debt-laden Saga cruises into unchartered waters

Debt-laden Saga has said it is ‘exploring opportunities’ for its cruises business – which could even result in its sale.

The company, which specialises in insurance and holidays for over-50s, said it was looking at a ‘partnership agreement’ as it tries to drive down its spiralling debts.

A spokesman said: ‘The board is exploring opportunities to optimise Saga’s operational and strategic position in cruise, where exceptional demand for its boutique Ocean Cruise offer means it is operating at close to capacity.

‘No decision has yet been made and there can be no certainty that any partnership agreement will occur. A further announcement will be made in due course, as appropriate.’

Saga refused to rule out a sale and it is understood that all options are on the table.

Debt-laden: Saga said it was looking at a ‘partnership agreement’ as it tries to drive down its spiralling debts

The update, which sent shares soaring 6.3 per cent, or 9.2p, to 156p yesterday, came after Sky News reported that Saga was considering selling its vessels or dumping the business under a licensing arrangement.

This is ahead of a £150m bond repayment due in May and the ongoing pressure of its £650m debt pile. The company did not expand on what a new ‘partnership deal’ would entail.

Its two flagship vessels, Spirit of Adventure and Spirit of Discovery, run cruises around the British Isles, the Mediterranean, the Nordics and the Caribbean, with prices ranging from £1,300 to £15,000.

Saga was reportedly in talks to sell its underwriting business last year to Open, an Australian insurer, but the deal failed to get over the line. The motor insurance arm has suffered in an era of high inflation, ultimately pushing up the price of payouts.

Analysts at Peel Hunt this week said that the travel arm has ‘turned a corner’ but added that the company needed to consider restructuring the insurance business.

Saga is expected to update shareholders in a trading statement next week.

This will be the first update since Euan Sutherland stepped down as chief executive in November. He was replaced by Mike Hazell, who was the group’s chief financial officer.