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Could Booking Holdings potentially run out of cash in the second half of 2021?

If things get super bad, that’s a possibility. Compared to many other travel companies, Booking Holdings was in relatively good shape before the coronavirus pandemic turned the world into a lockdown pandemic, but it made a series of disclosures about dire scenarios that are chilling.

After all, at the end of 2019, before the outbreak of coronavirus was in the headlines, Booking Holdings had $6.3 billion in cash and short-term equivalents on hand, and today it potentially has access to a $2 billion revolving credit line.

But the company noted Wednesday in a financial filing about senior notes offerings, that in the past few days its room night reservations are down 85 percent compared with a year ago. When excluding the announced external financing and potential access to the $2 billion credit line, the company believes if business conditions worsen it has enough liquidity to last only through the second half of 2021.

But Booking Holdings added: “We cannot, however, assure you that this will be the case.”

Booking Holdings explained that in late March Moody’s retained Booking’s A3 senior unsecured debt rating, but downgraded the outlook to “negative.” Previously the rating was “stable.”

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Booking noted that numerous factors could make borrowing much more difficult in the future. The company would have to pass a financial test to access its $2 billion revolving credit line, and it may not be able to pass muster “if the deterioration of our business continues.” the company stated.

Potential Impairments to Kayak and OpenTable

In other revelations made as part of its update on Covid-19, Booking Holdings stated:

  • It will likely record a “significant” impairment charge, mostly tied to a carrying value of $2.1 billion goodwill for its Kayak and OpenTable units when Booking reports its first quarter results. The presentation of its results for the March 31 quarter hasn’t been scheduled.
  • Although Booking’s first quarter results have yet to be publicized, the company said Wednesday that it expects its financial results for the second quarter, which ends June 30, to be “much more significantly impacted” from coronavirus than the first quarter, when the outbreak was largely limited to China and other countries in Asia.
  • Booking expects coronavirus “to have a significant adverse impact on our business for the duration of the pandemic and during the subsequent economic recovery, which could be an extensive period of time.”
  • Booking’s previously disclosed risk factors, published in its annual report February 26, could get riskier. Many of those risk factors could be heightened, the company said, especially as it relates to the company’s outstanding debt.

Booking Holdings’ somber warnings came in the context of announcing senior notes offerings of $1 billion and $750 million in principal due 2025 and 2027, respectively.

The company said it would use the net proceeds for general corporate purposes and to repay debt.

Photo Credit: One part of the lobby of the Booking.com headquarters in Amsterdam. The online travel agency is the largest unit in Booking Holdings, which updated investors on April 8, 2020 on the financial impact of the coronavirus pandemic. Skift