The cruise industry has been hit hard by the pandemic – as we know all too well. A year without cruises means that the cruise lines have virtually no income while the maintenance of the ships continues, fuel is needed to run the ships, offices and crew have to be paid, and the cruise lines have to pay thousands in debt payments and interest.
The extent of the devastation that has struck the beggar’s faith in industry. Industry benefited from the golden years, lines filled the coffers to the brim before the pandemic hit.
Cruise line executives have been telling us for months that cruise ships will not sink and they have been true to their word. But what are the financial prospects?
Data: Achkhovas comparata
We look at the finances of the three major cruise lines reviewed by Comprar Acciones and their performance over the past 12 months.
Let’s start with the biggest of the three. Carnival Cruise Line currently operates the largest fleet of cruise ships in the world. The nine brands and 87 ships (up from over 100 a few years ago) are depleting their cash reserves at an alarming rate.
In August 2020, Carnival Corporation announced total debt of $24.9 billion. By the end of 2020, $20 billion had been raised through the issuance of shares and bonds, while cash and cash equivalents stood at $9.5 billion at the end of November.
However, this debt has grown rapidly and will reach $30 billion by the end of February 2021. During the month, the company raised $3.5 billion through a bond issue and announced plans to raise another $1 billion. In addition, the company has committed to a $4.2 billion refinancing that expires in 24 months.
Worth reading: 10 benefits and tips on Carnival Cruise Shares
With a fairly healthy cash position of $9.5 billion, the cash burn rate the company can afford remains high. In the fourth quarter of 2020, monthly cash usage averaged $530 million. It is expected that the cost of the ships will increase exponentially once the ships begin to prepare for the voyage.
The costs are related to the full refuelling of the ships, the fuel costs and, last but not least, the flights and the testing or vaccination of thousands of crew members.
The company has pent-up demand from regular customers, who have submitted high orders for the second half of 2021.
However, the competition sought to transship as many vessels as possible, whereas CCL only operates with some Costa and AIDA vessels, and will do so once the UK gets underway. The largest cruise line within Carnival Corporation, Carnival Cruise Line, is not yet planning a launch.
Royal Caribbean is making a serious attempt to revive cruises outside the U.S., bypassing the CDC framework that has been stuck for months. Investors have welcomed the company’s plans and its share price has risen steadily over the past month. But that doesn’t mean the company isn’t already in trouble.
of the Royal Caribbean cruise ship: Emrys Takkar
On 4. As of November 2020, total debt outstanding is $19.12 billion, of which $17.63 billion is long-term debt and $1.49 billion is short-term debt. The company’s net debt, adjusted for $3.02 billion in cash, is $16.11 billion. Although the company has sold the luxury brand Azamara, the sale has not had a major impact on the company’s finances.
Since the start of the pandemic, Royal Caribbean has made up between $250 and $270 million in cash reserves. The company certainly won’t want to maintain that number, but will add a few more startups in the coming months. However, the company can also expect some cash flow.
Reservations have already been made for the second half of 2021, and the same is true for 2022. However, the company can now convert passengers who want to sail into actual reservations.
While many cruise lines are experiencing strong sales on their domestic, Mediterranean and Caribbean itineraries, the same should be true for Royal Caribbean. Some staterooms aboard the Celebrity Millenium departing from St. John’s, Newfoundland and Labrador. In the past it has been reported that these were all complete on St. Maarten.
At the end of 2020, Norwegian Cruise’s total debt was $12.15 billion. At the end of the third quarter of 2020, the company had $11.3 billion in debt. In December 2020, the company issued $850 million in senior notes.
photo credit: ackats / Shutterstock.com
Norwegian Cruise Line Holdings, the parent company of Norwegian Cruise Line, Regent Seven Seas and Oceania, has had a fairly stable cash burn over the past 12 months. It burns an average of $150 million a month, but is not far behind the other two companies in terms of size.
Read also: 10 benefits and tips on Norwegian Cruise Line’s share price
Norwegian Cruise Line seems to want to go the same route as Royal Caribbean. The company has now cancelled cruises on several ships and announced that NCL will take them elsewhere.
With the order figures looking very good for all three brands, there is no doubt that Norwegian will be well resilient to the pandemic.
The cruise industry is determined to revive cruises on its ships, led by Royal Caribbean. The pandemic has serious implications for cruise lines and it will take many years for them to fully recover.
However, if the current trend continues and we see more and more ships on the high seas, recovery is not far away.
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