The COVID-19 pandemic has taken a significant slash at Booking Holdings”™ operations, and the Norwalk-based company warned it could potentially run out of cash by the second half of 2021.
In a Section 8-K financial filing, the company stated that it had $6.3 billion in cash and short-term equivalents by the end of 2019, and it currently has access to a $2 billion revolving credit line. But the impact of the pandemic on the travel- and restaurant-focused company has been devastating.
“Although it is impossible to accurately predict the ultimate impact of these developments on our business, our expected results for the quarter ended March 31, 2020 have been significantly and negatively impacted, with a material decline in gross travel bookings, room nights booked, total revenues, net income, cash flow from operations and Adjusted EBITDA as compared to the corresponding period in 2019,” the company stated. “Newly-booked room night reservations ”“ excluding the impact of cancellations ”“ have been declining as the COVID-19 outbreak has spread, and in recent days have decreased by over 85% as compared to the comparable period in 2019. This downward trend could continue and newly booked room night reservations may be canceled.”
While the company stressed that its current liquidity could last until the second half of 2021 “if our business volumes continue to decline,” it said that it could not offer total assurance that could occur.
“Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, our operating performance and our credit ratings,” the filing added, noting that Moody”™s Investors Service recently changed its outlook on the company to negative from stable. “If our credit ratings were to be downgraded, or financing sources were to ascribe higher risk to our rating levels, our industry or us, our access to capital and the cost of any financing would be negatively impacted.”
Booking Holdings also acknowledged it was “currently evaluating goodwill, long-term investments and long-lived assets for possible impairment,” and conceded that “given the volatility in global markets and the financial difficulties faced by many of our travel service provider and restaurant partners, we expect to increase our provisions for bad debt and for cash advances to our travel service provider and restaurant partners, which increase could be material.”
