Interactive Investor

Insider: two travel bosses load up on shares

10th May 2021 16:44

Graeme Evans from interactive investor


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Both companies are braced for the release of pent-up demand once travel restrictions ease this summer.

More directors have got in position for the re-opening of the travel industry after share buying at cruise ship operator Saga (LSE:SAGA)and booking firm Trainline (LSE:TRN) in the past week.

Saga's CEO Euan Sutherland spent almost £200,000 on his company's shares on Wednesday, while Trainline non-executive director Jennifer Duvalier picked up £20,000 worth of shares in the wake of the firm's full-year results on Thursday.

Both companies have endured a gruelling year, but are now braced for the release of pent-up demand once travel restrictions are eased this summer. For insurance and holidays firm Saga, the early signs for its travel business are encouraging after it revealed cruise bookings worth £154 million for 2021-22 and 2022-23, a 20% rise on the same point last year.

The inaugural cruise for its new Spirit of Adventure ship takes place in July and will feature a round Britain tour taking in Edinburgh and Newcastle among other cities. All passengers are required to have had both doses of a Covid-19 vaccination prior to boarding.

Sutherland said: “It's clear that there is significant pent-up demand among our customer base, the vast majority of whom have now been vaccinated and are ready to enjoy post-lockdown freedom.”

He revealed a loss of £61.2 million for year to the end of January as the company wrote down the value of its travel business and saw underlying profits slide 84% to £17.1 million, However, Sutherland said the company's finances were now more secure following September's £150 million capital raise, two-thirds of which came from former owner Sir Roger de Haan.

The fundraising heightened the pain for those retail shareholders holding the stock since the popular 2014 flotation, with shares 90% lower than their starting point and then diluted by the capital raise. A consolidation of shares as part of the financial restructuring has rebased the price, which closed at 382.8p on Friday night.

Optimism over the vaccine roll-out has led to a rebound of 180% since early November, but analysts at broker Numis Securities think there's potential for more after better-than-expected margins of £74 per motor and home insurance policy in Saga's retail broking division.

They also highlighted that April's annual results showed cash burn in the travel business at the low end of the £6 million to £8 million a month guidance and net debt £34 million below market expectations at £760 million. Numis has a price target of 585p, signalling a decent fight back for a company celebrating its 70th anniversary this year.

Sutherland also bought shares in February last year when they were the equivalent of 393p and took part in the capital raise, which saw de Haan return to the board as chairman.

The buying of Trainline shares by Duvalier, meanwhile, came after the company reported an operating loss of £100 million as ticket sales plunged to a fifth of the previous year's level at £783 million.

Trading has been encouraging at the start of the new financial year and the acceleration towards online and digital channels is continuing at pace after 70% of all e-tickets were sold by Trainline in the past year.

The company is also optimistic about its longer-term prospects as significant investment in high-speed rail is planned over the next decade and there's now greater environmental awareness of the benefits of rail versus air and car.

Shares jumped 80% in the fortnight following November's Pfizer vaccine breakthrough. However, they have struggled for momentum since then as Trainline is in the sights of six different short-sellers, including an arm of George Soros' investment management business.

Duvalier, who is Trainline's senior independent non-executive director and used to be executive vice-president at Arm Holdings, bought the shares at a price of 438p on Thursday.

Rotala share buying is a family affair

The father and son at the helm of AIM-listed Rotala (LSE:ROL) have backed the bus operator's recovery prospects, having seen the Covid-19 pandemic dash hopes for the company's best-ever results.

Rotala has grown through merger and acquisition and now has operations spanning Heathrow Airport, the West Midlands and the North West, with operating companies including Diamond Bus and Preston Bus. It has more than 700 vehicles and 1,900 staff.

Government support for the bus industry proved invaluable during the pandemic, but the longer-term effects on travel, living and working patterns remain unclear.

A new national bus strategy promises large-scale fresh investment and the company believes it is also well placed to take advantage of opportunities for organic growth and acquisitions.

Chief executive Simon Dunn bought £7,000 shares at a price of 31p on Thursday, the same day as his father bought £7,750. Bob Dunn is managing director of the company's North West division and has 50 years’ experience of the transport sector, including as chief executive of AIM-listed Dunn-Line prior to its sale to Veolia in 2006.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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