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The collapse of the tourism industry globally has not spared caravan and motorhome rental operator Apollo (ASX: ATL) which has made the decision to pause its business in the USA.
Because of the COVID-19 pandemic Apollo has sold its fleet of vehicles in the USA and has placed its operations in the country into hibernation until the summer of 2021.
Apollo says the USA has a liquid RV sales market, and as such it has been able to secure commitments from dealer partners to purchase most of its current fleet.
The Brisbane-based company says cash proceeds from the sale will exceed the $60.5 million in debt relating to the US fleet.
Since 31 December Apollo says approximately 560 units have been delivered to dealer partners, leaving approximately 400 units left to be delivered before 30 June.
This takes the total FY20 USA fleet deliveries to approximately 1,090.
Total book losses on the sales of its USA fleet are expected to be in the range of $12 million to $12.5 million.
"In the Northern Hemisphere, the majority of Apollo's annual rental revenue is generated from international travellers over the June to October summer period," says Apollo.
"With the very strict coronavirus (COVID-19) international travel restrictions in place, the group has decided to put its USA operations into hibernation until summer 2021."
Despite the challenges of COVID-19 Apollo says it has continued to manufacture in Australia and operate its retail and rental businesses where possible within local government restrictions.
However, the group's manufacturing facility in New Zealand was closed because of COVID-19 restrictions. Procurement of future fleet for New Zealand will be aligned with the level of rental rebound in the region.
As restrictions begin to ease in certain jurisdictions, Apollo appears to be optimistic about people getting out and travelling again.
"Government movement restrictions are beginning to ease globally, with local travel expected to be allowed in the coming weeks together with the re-opening of national parks, caravan and camping grounds," says Apollo.
"Apollo is preparing for the reopening of domestic travel, and although currently small in number, bookings are starting to be received for pickups in the coming weeks and months.
"Australian retail RV customer orders since the start of May have returned to near their pre-Coronavirus levels."
The company says it has been monitoring its liquidity closely during the pandemic period.
Cash balances have moved from $17.3 million as at 31 December 2019 to $12.4 million as at 12 May 2020.
To reduce its cost base Apollo was forced to make staff redundant or ask staff to take reduced hours or leave.
The company's senior executives and board members have all taken a 30 per cent salary and fee reduction for the remainder of FY20.
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