(Sharecast News) - Saga said on Friday that is considering options for its cruse business, including a partnership arrangement.
Responding to a press report a day earlier, the company 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.
"It has concluded that a partnership arrangement for Ocean Cruise would be consistent with group strategy to move to a capital-light business model to support further growth and crystalise value, reduce debt and enhance long-term returns for shareholders."
Saga, which specialises in products for the over-50s, said 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, it added.
At 1005 GMT, the shares were up 7.6% at 158p.
Broker Peel Hunt, which rates the shares at 'hold', said the potential partnership agreement for the cruise business could reduce the debt load of the business, perhaps even at the same time expanding capacity in a capital-light way from Saga's point of view.
"TUI, for example, operates a joint venture with Royal Caribbean. Strategically, we believe the best fit would be with Carnival, which is the biggest player in the ex-UK market (P&O Cruises and Cunard) and could perhaps take a 50% stake in a JV," it said.
"The question is which cruise operator has the balance sheet capacity to execute such purchase. So far, Saga states that no decision has been made. Earlier last year, the company had explored selling its insurance underwriting business, a plan that was postponed due to market circumstances. It is evident that Saga is pursuing a wide range of options to financially place the business on a firmer footing."
Saga (SAGA)