Moody’s revises Geo Travel outlook to negative

Moody's Investors Service said it changed the outlook on Geo Travel Finance SCA Luxembourg's (Odigeo) ratings to negative from stable.

At the same time, the agency affirmed Geo Travel’s B2 corporate family rating and B2-PD probability of default rating, as well as the Caa1 rating on the €129 million senior unsecured notes maturing in 2019.

Moody's also affirmed the B3 rating on the €325 million senior secured notes – issued by Geo Debt Finance SCA – maturing in 2018.

On Nov. 25, Geo Travel presented its results from the second quarter (to September), which showed a double-digit decline in earnings for the second quarter in a row. In line with guidance established at the end of August, the first half reported EBITDA for FY2015 (to March 2015) was at €46.3 million, versus €62.1 million a year earlier.

The company attributed this decline to a number of factors including higher merchant costs, changes to a Google algorithm resulting in higher acquisitions costs per booking, as well as higher call centre costs. Moody's also notes that the recent conflict involving Geo Travel Finance and International Airlines Group (unrated) – while having little or no impact on the company's underlying operating performance during the conflict – illustrates the high level of inherent business risks in the industry.

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