Posted on 11/12/2020 1:08:52 PM PST by Capt. Tom
All cruise lines are losing money hand over fist. But how much loss can these companies realistically bear? As the pandemic rages on, cruise companies are starting to feel the pressure.
As we look at a resumption of cruises in the first months of 2021, we take an in-depth look at the staggering numbers released by Stock Apps.
The Largest Cruise Company, Burning The Most Cash On August 31, 2020, the third quarter ended for Carnival Corporation. During the pandemic, the first full quarter showed the full effect the operations pause was having on the largest cruise company in the world.
Carnival Corporation suffered a $2.9 billion loss during this period. In Q3 2019, the company made revenues totaling $6.53 billion. In Q3 2020, the company made a mere $31 million. A 99.5% drop in revenue.
Carnival’s stock price has suffered as well. Trading at $51.35 in January, the stock lost 68% of its value and is now trading at a mere $16.21.
The shocking number is the cash the company is burning monthly to be able to stay afloat. Every month during Q3, Carnival Corporation burned through $770 million cash on average.
The company does have the resources to survive the current situation for a few more months. It reported cash on hand of $8.2 billion at the end of Q3. While that may seem like a lot of money, the company will burn through much more per month once it starts getting ships back to operational capacity at the end of 2020 and the beginning of 2021.
Royal Caribbean not faring much better
In Q3, Royal Caribbean reported a loss of $1.2 billion according to the earnings report released.
Royal Caribbean Group is the owner of four brands: Royal Caribbean International, Celebrity Cruises, Silversea, and Azamara. Royal Caribbean Group is also a 50% owner of a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises.
Due to its smaller size, Royal Caribbean has been burning less cash each month; however, with $250-270 million each month, these are still respectable numbers.
Similar to Carnival Corporation, the Royal Caribbean stock has been hit hard by the pandemic in 2020. Trading at $121.18 on January 19, 2020, the stock had lost around 56% by November 2020. It is now trading at $60.59.
The question remains how long Royal Caribbean will be able to keep this up. As with Carnival Corporation, it will start burning through cash faster and faster once operations resume.
As of September 30, the company had liquidity of approximately $3.7 billion, including $3.0 compared to $4.1 billion as of June 30.
The Biggest Loser? Norwegian Cruise Line
The biggest loser during the pandemic seems to be Norwegian Cruise Line Holdings or NCLH. The company which operates Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas could have an estimated 99.45% to 100% loss for the period.
Its revenue has also crashed, going down from $1.66 billion to $0.02 billion, posting a drop of 99%. Norwegian Cruise Lines stock is suffering badly, losing more than 70.95%.
The Global Scale Of The Industry While the scale of the losses is mindboggling, the above doesn’t tell the whole story. The ‘Big Three’ represents a mere 75% of the global industry. There are over 50 cruise lines with 272 ships (associated with CLIA), and this number is still growing as new ships continue to be delivered.
The cruise industry created 1.1 million direct jobs. It served 30 million passengers in 2019, and this number was expected to reach 32 million in 2020 before the pandemic. The cruise industry had a total financial output of $134 billion in 2017, and this number went up in 2018 and 2019.
The total amount in $ the operations pause has cost is hard to predict. However, according to Cruise Lines International Association, cruise suspensions cost the U.S. economy over $25 trillion and 164,000 jobs.
Cruises are hardly luxury. Prices are the cheapest for a vacation. Food lodging and entertainment for 100 dollars a day. Can’t beat them.
Some cats have all the luck.
Even though they may have reputations for being fastidious and hard to please, it turns out, cats are pretty good travelers — especially this Elf Sphynx named Bug Naked.
Captain Kate and Bug onboard Celebrity Cruise Ship
CREDIT: CAPTAIN KATE MCCUE
Much like Vladimir the cat, who travels with his people to national parks or little Amelia sailing around the world with her human, Bug Naked lives on the go with Instagram-famous cruise captain Kate McCue, who often features the feline on her feed.
McCue herself has a pretty impressive resume beyond being a social media star. According to The Telegraph, McCue has worked for cruise lines for about 13 years, and will soon take on Celebrity Cruises’ new flagship, Celebrity Edge, as captain.
On top of this, McCue became the first female cruise ship captain in America, according to The Telegraph. “Everyone has a stereotypical idea of a captain and I’m missing some pounds. I don’t have entirely gray hair. I don’t have a beard or a parrot but I think when the guests meet me they’re pleasantly surprised,” told CBS about her job.
McCue had dreamt about captaining a cruise vessel since she was about 12. Her father said to her, “You can do anything you want in the world, including drive this thing,” according to CBS. So McCue started to work on making her dreams come true, starting as a cadet at the California Maritime Academy in 1996.
“I think this is the greatest job in the world...traveling, meeting all these people, getting paid for it. It’s amazing.” McCue told CBS.
And what makes McCue entirely unique, other than breaking glass ceilings, is her open and honest approach to the job. While some captains prefer to keep a degree of separation from guests, McCue abandoned having a “Captain’s Table” at dinners and frequently places herself out with the passengers so anyone can talk to her if they wish, according to The Telegraph.
“Back in the day you had these tyrannical captains that you couldn’t speak to unless they spoke to you. Over the 20 years I’ve seen the rounding of rough edges of these people. Or, if they couldn’t adapt there was no place for them on board the ships,” she told The Telegraph.
She’s also just as open to others online as she is offline.
McCue has over 60,000 followers who keep up with her adventures at sea. Her Instagram feed is full of beautiful shots on the water, fun photos of her daily life as captain, her husband Nikola, and, of course, her travel companion Bug Naked.
“My posts are kind of geared [to show that there are] lots of opportunities in this job. And, if you see it, you can be it,” she said to The Telegraph.
I believe that Harris/Biden will drive them out of business. They’ve already advocated a 6 week total lock down in January. That means the limited sail conditions just approved will be revoked. You are looking at no earlier than June if Harris/Biden are actually sworn in.
The cruise Industry is in the soup all over the world with the reactions of countries to the covid virus.
The cruise lines can't pull out of the USA and cruise elsewhere until things settle down here.
Other world wide countries are screwed up just like we are, as trial cruises in Europe and the Caribbean are proving, right now. Those lines shut down to regroup and see how the pandemic goes. -Tom
This wasn’t mentioned in the article, but most of the cash on hand amounts listed is new debt... the whole industry is insolvent... even before accounting for the future downward revisions to come on their ship values.
I like you like a sister...however; - my sister and her 20+year beau love to cruise... That is how they spend their living, heck they bought a condo in FTL to ease their way to cruising...
It is not an upper class luxury..
Yeah, bad phrasing on my part.
I guess I equate things I don’t need, or would never bother with, to be ‘luxuries.’ I don’t understand ‘vacations’ either. Guess I’ve spent my life building a life I don’t need to escape from? ;)
My BFF and her husband cruise all the time; well, they DID until now. They are upper-middle class, plus they’ve traveled for free a lot because he managed a cruise booking company up until a few years ago.
I get it. Really, I do. I guess I just equate things like that to be the same as me buying a Cadillac, however, I WOULD spend that same amount, if not more, on a tractor!
I DID see a Lincoln pick-up truck the other day that I drooled over for a few minutes, LOL!
I'm willing to be a passenger though.
“This wasn’t mentioned in the article, but most of the cash on hand amounts listed is new debt... the whole industry is insolvent... even before accounting for the future downward revisions to come on their ship values.”
‘’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’’
Take a look at the prices for these older and smaller cruise ships and estimate what the newer bigger ships might go for in a distressed sale.
I am sure the creditors who have these ships for collateral are doing just that now, and have revised the collateral value down. -Tom
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Here’s What an Entire Cruise Fleet Sold for at Auction
November 08, 2020 excerpt Cruise Industry News....
The Cruise & Maritime Voyages fleet auction is over, with five ships heading to new owners or to scrap, and the values have finally been revealed as buyers were able to get cruise ships for pennies on the dollar during the sealed bidding process.
The Results:
Vasco Da Gama
Built: 1992
Tonnage: 55,451
Capacity: 1,258 Guests
Buyer: Mystic Invest
Sales Price: $10,187,000
Columbus
Built: 1988
Tonnage: 63,500
Capacity: 1,400 Guests
Buyer: Seajets
Sales Price: $5,321,000
Astor
Built: 1987
Tonnage: 20,704
Capacity: 650 Guests
Buyer: Projected to be scrapped
Sales Price: $1,710,000
Magellan
Built: 1985
Tonnage: 46,052
Capacity: 1,452 Guests
Buyer: Seajets
Sales Price: $3,431,000
Marco Polo
Built: 1965
Tonnage: 22,000
Capacity: 820 Guests
Buyer: Projected to be scrapped
Sales Price: $2,770,000
Cruise lines mostly suck discretionary spending out of the U.S. economy and send it overseas. They are not American companies.
The new creditors have undoubtedly placed their liens in a superior position to old debt, or they wouldn’t be putting up their/their investors money. For stock holders, a negative equity/insolvency with low odds of a fast, huge operational turnaround is a bad bet at anything near current prices.
https://www.travelandleisure.com/travel-news/female-cruise-captain-cat
Bug Naked is a Sphinx. That explains the moniker.
Sphynx. Sorry, kitty!
To me that is why a forced bankruptcy by the creditors might be coming before all the loaned money is gone, and the creditor can be the first in line to collect, depending in what country the bankruptcy occurs . -Tom
Exactly. The shareholders’ money, and any chances of it ever coming back, are long gone.
I wonder if these people like McGillvray who write for cruise media get free trips.
I know that some travel agents get free trips ,especially on brand new ships so they can tout the advantages of booking a trip on one of them.
Seems logical some travel writers would also get free trips to help the Cruise Lines out with positive reporting. -Tom
Hahaha - My F-150 with a V-8 Mustang Engine is fast/fun to drive.. Glad I didn’t offend you...
Never! :)
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