Recession Watch: The Debt Load of the Travel Industry's Public Companies

Skift Research is looking to a solid growth year for the travel industry, but what if something unexpected occurs, and things get nasty? We thought it would be interesting to look at nearly three dozen publicly traded companies, including airlines, hotels, booking sites, global distribution systems, cruise lines, and major platforms like Google and Facebook, to see which companies have the most and least debt, and which ones, in theory, are the best-positioned to deal with it in the event of a recession or big downturn. We concede that this is an imperfect forecast of how various companies might handle their debt in a potential recession, but these debt burdens are worth noting because they would certainly be factors in companies' maneuverings. Consider Norwegian Cruise Line Holdings CEO Frank Del Rio's take on the issue of debt and maneuverability in the event of the economy heading downward. "I think that in a capital-intensive, somewhat cyclical business, that having less leverage is better than having more leverage," said Del Rio said at the company's investor day in May. In our analysis below, Norwegian Cruise Line had a 3.1x ratio of net debt to forward EBITDA (earnings before interest, taxes, depreciation and amortization) at the end of the third quarter. Del Rio said at the investor day that he thinks "for the most part, the broad investment community is comfortable at 3 and below," referring to leverage. "When you look at our peers, they are below 3, and we think we ought to be in that area. Is there any hard reason why? No. Do I have flexibility? Yes." We looked at each company's net debt in their most-recently released financials (the vast majority are for the quarter that ended September 30). And to get a more-well-rounded look, we ranked their net debt versus forward EBITDA ; their total debt versus total equity, and we blended those into an overall rank. [We elaborate on how to read the chart in the latter portion of this story.] Before we go any further, here are the numbers. Be advised that you can manipulate the chart by scrolling to the left or right to view all of the columns. Ranking Travel Brands Debt Load and Liquidity Against Their Peers   Companies Debt (USD, mm) Cash & Short-Term Equivalents Net Debt (USD, mm) Net Debt to Fwd EBITDA Total Debt to Total Equity Rank: Net Debt/FWD EBITDA Rank: Total Debt/Total Equity Overall Rank Airlines easyJet 1,27