Carnival Corp. to Further Downsize Fleet, Disposing of 18 Ships

Travel Pulse ^ | SEPTEMBER 15, 2020 | THERESA NORTON

[Capt. Tom]

Carnival Corp. now says it is getting rid of 18 ships, up from the 13 ships it planned to dispose of in early July. The company did not reveal which ships would be sold or scrapped. Eight have already left the fleets of Carnival’s nine cruise brands, which operate more than 100 ships.

“We continue to take aggressive action to emerge a leaner, more efficient company,” Carnival Corp. President and CEO Arnold Donald said. “We are accelerating the exit of 18 less-efficient ships from our fleet. This will generate a 12 percent reduction in capacity and a structurally lower cost base, while retaining the most cash generative assets in our portfolio.”

Carnival Corp. made the announcement as part of a financial summary in a filing to the SEC. The filing reported a U.S. GAAP net loss of $2.9 billion for the quarter ending Aug. 31 and an adjusted net loss of $1.7 billion.

We will emerge with a more efficient fleet, with a stretched-out newbuild order book and having paused new ship orders, leaving us with no deliveries in 2024 and only one delivery in 2025, allowing us to pay down debt and create increasing value for our shareholders,” Donald said.

The company’s monthly average cash burn rate for the third quarter 2020 was $770 million and is expected to be about $530 million for the fourth quarter. Since cruising ground to a halt in mid-March due to the COVID-19 pandemic, Carnival Corp. has taken actions to preserve cash and secure additional financing to increase its liquidity.....

The company said it is unable to predict when the entire fleet will return to normal operations, although a Carnival Cruise Line representative hinted at a possible return with short cruises in November.

[Capt. Tom]

It’s like a family that keeps going more and more into debt, but it’s ok because dad keeps getting raises to match. But dad just got laid off and had to get a minimum wage job at McDonalds.

If you look way down at the bottom of the filing Carnival mentions trying to get a "covenant extension" which means more time to pay back their borrowed Billions.

If Carnival can't get the extension, they have to pay it back on time, and that could cause a ...??? You know what I mean. -Tom

this should be Carnivals SEC filing

[Red Badger]

[Red Badger]

That black vertical line on the lower right of the column is a Japanese Aircraft carrier............or so I’ve been told years ago......................

[Leaning Right]

> Who buys extra cruise ships? <

Maybe the Chinese will convert them into troop ships.

(only half-kidding)

[Texas resident]

Save fuel. Shorter turn around time. The marxists get to live the full socialistic experience. They will love it.

[BuffaloJack]

My last cruise was on a destroyer off the coast of Cuba in 1962.

[Dead Corpse]

Another excellent idea... The ships makes 3 stops outside the US... Havana, Puerto Cabello, and Port Harcourt.

They get to pick one and leave...

[SuperLuminal]

"I can take one of them off their hands, if the price is right."

Yep, I agree just as long as I can tow it to a ramp on the Potomac River and has a good trolling motor...

[MayflowerMadam]

“sitting by the pool all day is kinda boring.”

With about 20 cruises in my past, I haven’t sat by a pool one minute. Too many other things to do.

[shotgun]

Park one of those at the dock in a major port city, convert it to condos/apartments and your in business plus they already have their own shopping malls and restaurants. I bet you even could take advantage of the Trump Enterprise zone money to differ some taxes.

[Political Junkie Too]

I wonder about the kind of people you’ll run into on a cruise.

That also depends on what class of service you buy.

Recently, I've been cruising in suites, which gets me into dedicated suite lounges, reserve theater seating, private breakfasts, private pool seating areas, and some specialty dining offers. That means I would be mingling with like people.

-PJ

[Capt. Tom]

My last cruise was on a destroyer off the coast of Cuba in 1962.

I did a cruise from Seattle Wash. to Seoul, Korea in Nov. 1955 across the Pacific in the Gen. Nelson M. Walker; and did a return trip from Seoul, Korea to Oakland Calif. in March 1957,on the CG Morton. -Tom

[prophetic]

Maybe they can donate them to the US NAVY?

I'd love them to be used in the next SINKEX exercise.

Also for the next SINKEX they should allow the A-10 WARTHOG to go BRRRRTTTT on it from stem to stern!
Followed up with a timed salvo from a Virginia attack sub torpedo with a 2 F-15's dropping 4x 500 Pounds Jdams.

I have many combinations that I could suggest for this SINKEX. SINKEX = Sink Exercise. This is where the Navy have an old ship in a target area to be sunk by various means.

[Oatka]

Not only that, I wonder about the kind of people you’ll run into on a cruise. I guess it depends on whether it’s a Disney cruise or a cruise primarily for singles.

We were warned about Carnival catering to a young crowd of drunks - that was the second best cruise (I didn't get drunk, just great being around younger people). The best was one through the Panama Canal, and I would suggest that one.

[Eric in the Ozarks]

I got six trips across and back, Seattle-Yokohama in the 1950s-1961.
Two weeks at sea was enough for me...

[Capt. Tom]

I believe Carnival is doing the right thing in downsizing and trying to reorganize and keep their creditors who loaned them BILLIONS at bay.

I find it hard to believe Carnival voluntarily put this in their SEC filing.
To me it might panic the crediors into forcing a bankruptcy, if Carnival balks on any of its loan agreements with the creditors.

Below is part of Carnivals SEC filing:

There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

•COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, growth, reputation, litigation, cash flows, liquidity, and stock price
•As a result of the COVID-19 outbreak, we may be out of compliance with a maintenance covenant in certain of our debt facilities, for which we have waivers for the period through March 31, 2021 with the next testing date of May 31, 2021
•World events impacting the ability or desire of people to travel may lead to a decline in demand for cruises
•Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters may impact the satisfaction of our guests and crew and lead to reputational damage
•Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection and tax may lead to litigation, enforcement actions, fines, penalties, and reputational damage
•Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks, including the recent ransomware incident, and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and lead to reputational damage
•Ability to recruit, develop and retain qualified shipboard personnel who live away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction
•Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs
•Fluctuations in foreign currency exchange rates may adversely impact our financial results
•Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales, pricing and destination options
•Geographic regions in which we try to expand our business may be slow to develop or ultimately not develop how we expect

•Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests

[BobL]

Thanks for the ping, Tom. Carnival should have immediately moved to get rid of boats...since cruising will be at the far back-end of any recovery - and we’ve still got a ways to go, even before a recovery begins.

[PJ-Comix]

Part of me thinks sitting by the pool all day is kinda boring. Not only that, I wonder about the kind of people you’ll run into on a cruise. I guess it depends on whether it’s a Disney cruise or a cruise primarily for singles.

So sit by a bar and meet new people. That is really one of the best things about a cruise. You get AWAY from the internet and meet (GASP!) real people in person. All I can say is that I get bored easily and on my last cruise I didn't have a boring moment.

[PJ-Comix]

I would take a more upscale line like Celebrity, with an older clientele, over Royal.

Yup! The Trump 2020 Victory Cruise will be on Celebrity. Embarking from Port Everglades on December 6.

[MplsSteve]

“...all the no-strings sex.”

Wait!

What?!