Why your favorite cruise line probably isn’t going out of business, despite the COVID shutdown

the Points Guy ^ | Sept. 3, 2020 | Gene Sloan

[Capt. Tom]

Could the end be near for your favorite cruise line?

Given that most cruise companies haven’t operated a single voyage in nearly six months, and it’s unlikely that cruising will resume in a meaningful way anytime soon, it’s perfectly reasonable for you to worry about such a thing.

But we have some good news ...The three big, publicly traded companies that operate most of the biggest lines, including Royal Caribbean, Carnival Cruise Line, Norwegian Cruise Line and Princess Cruises, aren’t in imminent danger of sliding into bankruptcy — let alone collapsing completely. Indeed, all three of the companies — Carnival Corporation, Royal Caribbean Group and Norwegian Cruise Line Holdings — currently have enough cash on hand to muddle along for well over a year without a single dollar of revenue.

The biggest of the three, Carnival Corporation, currently is burning through around $650 million per month without any ships sailing — a staggering sum. Carnival Corporation had $7.6 billion in “liquidity” — cash and cash equivalents — as of May 31, when it closed the books on its second quarter. It added another $2.6 billion in liquidity in June through a senior secured loan.

The two other big, publicly traded cruise companies are in a similar position.

During a conference call with Wall Street analysts in August, Royal Caribbean CFO Jason Liberty said the company was burning through about $250 to $290 million a month during the cruising shutdown but had liquidity of more than $4 billion.

Norwegian Cruise Line Holdings in August said it was burning through about $160 million a month but had liquidity of $2.8 billion. in other words, the two companies had enough cash and cash equivalents on the books in August to survive nearly 14 and 18 months, respectively, with no cruising.

[blueunicorn6]

This is what happens when they let Motorcycle racers steer the ship.