The business model of DO & CO is exposed to the outbreak across all of its operating segments: airline catering, event catering and restaurants/lounges/hotels. DO & CO serves a wide number of airline clients at 30+ sites worldwide, including Austrian Airlines, Turkish Airlines, British Airways, Iberia, Cathay Pacific, Singapore Airlines, etc. Flight cancellations have become a topic of daily headlines as the Covid-19 is spreading to a number of countries, with Lufthansa for example having slashed up to 50% of its flights. While some DO & CO clients have already cancelled flights, or might do so in the future, the breadth of the portfolio of clients and destinations should provide some mitigation to the revenue downside. During the results conference call on February 20, management stated that due to flight cuts to China DO & CO was losing EUR 1.8 mn in revenues per month. On an annual basis we estimate that this would amount to a revenue loss of EUR 22 mn (ca. 1.7% of our last FY 20/21e top line estimate) and an EBITDA loss of ca. EUR 2.5 mn (ca. 1.8% of our last FY 20/21e EBITDA estimate). However, with the emergence of other virus hotspots we note incremental cuts of flights (for example to Italy), which were not included in the company’s initial impact estimate, hence we expect the potential impact on revenues to have moved beyond EUR 1.8 mn per month currently.

We expect other tourist destinations to be affected going forward, once the airlines gather more data on declines to leisure and business travel. We also expect to see an increasing number of countries cancelling sports and mass events, following the restrictions in Italy. Thus, we consider some events for which DO & CO provides catering, such as F1 races and football matches, to be at risk. All in all we consider DO & CO as one of the names potentially most affected by the Covid-19 outbreak in our universe given the high exposure of its top line generation to travel/catering.