Saga Travel has faced a £2 million hit from the collapse of Monarch Airlines as it issued a profits warning for 2018.
The disclosure came today as the over-50s travel and services company issued a trading update for the period between August 1 and December 5.
Underlying group pre-tax profit growth is expected to be restricted to between 1% to 2% for the year ending January 2018.
“This has been impacted by more challenging trading in insurance broking during the period and the Monarch Airlines administration, which has affected our tour operations business,” the company said.
“Our travel segment continues to trade well and is expected to be strongly ahead of the prior year.
“However, the tour operations business has been impacted by the collapse of Monarch Airlines with an approximate one-off cost of £2 million.”
No mention was made of a reported 100 staff redundancies but the group said it was making £10 million in cost savings next year by completing a review of its operating structure at a one-off cost of about £4 million.
“We expect an increase in the profitability of our broking and travel businesses next year, including the approximately £10 million of annualised savings from the actions we have taken in the current year,” the company said.
But it warned that overall underlying profit before tax is expected to be 5% lower than the current year.
“We continue to be on track to achieve our goal of increasing the profit before tax of our travel segment by 4-5 times by the year ended 31 January, 2022,” Saga added.
CEO Lance Batchelor said: “Against a backdrop of some challenging trading conditions in our final quarter, we continue to develop the business for the long term.
“With greater customer insight and a stronger business platform, now is the right time for Saga to invest in growing the customer base and the business.
“We are confident that the actions taken will ultimately see a better quality of earnings and profit growth across the business, supporting our progressive dividend policy for the benefit of our shareholders.”
Full year financial results are due to be issued on April 12, 2018.
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