eDreams ODIGEO earns ’B+’ rating upgrade from S&P on strong performance

Investing.com -- S&P Global Ratings has upgraded its long-term issuer credit rating for online travel agency eDreams ODIGEO S.A. to ’B+’ from ’B’. This upgrade follows eDreams’ strong operating performance for fiscal 2025, which ended on March 31, and its successful execution of its Prime strategy. The company’s member base grew by 25% year over year, reaching 7.3 million members.

In fiscal 2025, eDreams saw its leverage decrease to 4.2x from 6.5x in 2024. Its free operating cash flow (FOCF) remained strong at €69 million ($82 million), compared to €67 million ($79 million) in 2024. The company is now seeking to refinance its capital structure, planning to extend and increase its super senior revolving credit facility (RCF) from €180 million to €185 million ($214 million to $219 million). Additionally, eDreams plans to issue new €375 million ($444 million) senior secured notes, extending the maturity of both instruments to 2030.

S&P Global Ratings also upgraded its issue rating on the extended super senior RCF to ’BB’ from ’BB-’, while the ’1’ recovery rating on the facility remained unchanged. The agency assigned a ’B+’ issue rating and a ’3’ recovery rating to the proposed senior secured notes.

The agency expects travel demand to remain resilient despite ongoing macroeconomic challenges. It also anticipates that eDreams will continue its successful track record in increasing and retaining its Prime membership, which should result in a decrease in leverage to approximately 3.0x and a FOCF of €100 million ($118 million) in 2026.

eDreams’ solid operating performance and improved credit metrics were driven by strong growth in its Prime membership. The company’s revenue increased to €671 million ($795 million) in fiscal 2025 from €643 million ($762 million) in 2024, partly due to the expanded Prime membership base and despite a lower average revenue per unit. The company’s EBITDA margin improved to 13.4% from 9.0%, supported by the increasing longevity of Prime members, which reduces customer acquisition costs.

S&P Global Ratings expects eDreams to continue expanding its Prime model, leading to further improvement in credit metrics. The agency forecasts that Prime subscriptions will surpass 8 million by the end of fiscal 2026, supported by higher renewal rates and increased market penetration. It also predicts that eDreams’ adjusted leverage will trend toward 3.0x in fiscal 2026, with FOCF increasing to about €100 million ($118 million).

The company’s proposed refinancing aims to strengthen its debt maturity profile and is expected to be leverage neutral. Post-transaction, eDreams is estimated to have available liquidity of approximately €205 million ($243 million), sufficient to support the company’s operations for at least the next 12 months, barring any disruptions that could increase working capital needs or constrain cash flow expectations.

Despite the positive outlook, S&P Global Ratings noted some constraints on eDreams’ rating due to the limited track record of its Prime membership program. The market for subscription-based travel offerings is still relatively new, and it’s uncertain how much it will grow. The agency also acknowledged risks associated with ongoing disputes with Ryanair, which have contributed to a decline in non-Prime bookings.

The stable outlook reflects S&P Global Ratings’ expectation that travel demand will remain resilient throughout 2025, despite ongoing macroeconomic challenges. The agency also expects eDreams to continue increasing and retaining its Prime membership base, projecting that the company will generate a FOCF of approximately €100 million ($118 million) and an adjusted debt to EBITDA ratio trending toward 3x in fiscal 2026.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.