Posted on 12/03/2021 4:36:33 PM PST by Capt. Tom
More bad news for an already-crushed industry is making investors wonder how much more these companies can take.
Stocks fell sharply as investors heard about a new COVID-19 variant. Cruise ship stocks took huge hits as a result. Investors have to hope that travel-hungry passengers will have the opportunity to sail in 2022 and beyond.
Black Friday might not have created the same level of stock market discomfort that prompted the naming of Black Tuesday in 1929 or Black Monday in 1987, but stocks were nonetheless under pressure on the day after Thanksgiving. As of 10 a.m. ET on the holiday-shortened session, the Dow Jones Industrial Average (DJINDICES:^DJI) was down 790 points to 35,014. The S&P 500 (SNPINDEX:^GSPC) had lost 73 points to 4,628, while the Nasdaq Composite (NASDAQINDEX:^IXIC) had fallen 212 points to 15,632.
A new COVID-19 variant in South Africa prompted worries among investors across the globe. Market participants had already been concerned about a sharp rise in case counts in Europe, with correspondingly poor trends in the U.S. as well. Now, many fear that new restrictions on travel and other activities could bring about a return to conditions in 2020.
That's especially bad news for cruise ship operators, which have struggled just to sustain themselves financially in the hope of getting passengers on board throughout 2022.
A bad day on the seas Cruise stocks were among the hardest hit in the market Friday morning. Carnival (NYSE:CCL) led the way lower with an 11% decline. Royal Caribbean Cruises (NYSE:RCL) and Norwegian Cruise Line Holdings (NYSE:NCLH) weren't far behind, with losses of 10%. Even the more-diversified Disney (NYSE:DIS), whose cruise operations represent only a small portion of its overall business, saw its stock fall more than 3% Friday morning. For Carnival and Norwegian, the downward move was enough to send the stocks to new lows for the year.
Cruise-operator shareholders were already bracing for what they expected to be a long period of getting back up to full speed. In Norwegian's third-quarter financial report earlier in November, for example, the company said it was still burning cash at a rate of about $275 million per month. It expected that to rise to $350 million per month in the fourth quarter as Norwegian proceeded through its phased relaunch of its ships. Losses exceeded $800 million for the quarter, and Norwegian had to take additional steps to ensure ample liquidity amid rising debt.
Indeed, it was the hope for a full rebound in 2022 that seemed to buoy sentiment for cruise stock investors. Norwegian had reported that bookings for 2022 were in line with record levels from before the pandemic in 2019. Carnival said much the same thing a few months ago, reporting record high bookings for the second half of 2022. Royal Caribbean believed in late October that it could overcome nervousness about the COVID delta variant and keep bringing more of its ships back into service by the end of 2021.
What will the future bring? Other travel-related companies saw similarly alarming declines. Major U.S. airlines were down between 5% and 10%, with those more exposed to international travel seeing larger drops. Hotel operators also saw losses, with Marriott International (NASDAQ:MAR) losing almost 10% on the day so far.
Cruise ship operators are arguably in the most precarious position financially. Airlines received substantial financial assistance from the U.S. government, and political leaders are likely to see their survival as being more important to the travel infrastructure than cruise ships are. Most other travel-related companies have retained more financing options than cruise companies, which have already taken most of the obvious extraordinary measures available to them to stay afloat thus far.
Travelers clearly want to take to the seas. But if the newest COVID variant proves to be as bad as some fear, then they might not get that opportunity. Despite the willingness of investors to keep providing funding to cruise operators, any prospective future shutdown could prove to be the last straw for the ailing industry.
“Carnival (NYSE:CCL) led the way lower with an 11% decline”
Down 3.86% today
I had a difficult time posting this so I did it in its present form and then shut down my computer and restarted it, and it seems OK now.
It seems the new variant isn’t as bad as the previous ones, but if the fear mongers can whip it up, IMHO it will cause some of the cruise lines to declare a form of bankruptcy. -Tom
“Carnival (NYSE:CCL) led the way lower with an 11% decline”
Down 3.86% today”
I figure in about two more weeks we will have a handle on how this virus variant will play out.
Cruise lines have to also worry about the stability of this country economically, and our demented President. -Tom
Not covid
Another factor, I am not sure if any of these companies illegally mandated the vax for their employees. If they did, they will have endless long-term legal liabilities based on the long-term medical harms caused by ineffective vaccines across their large number of employees. I have heard someone compare this problem to a number of industrial companies that were wrecked by asbestos lawsuits in the 80s and 90s. This will be another painful lesson to shareholders of companies that went along in order to appease a fradulent US administration.
I would expect, in a rational normal world, that the country will not lock down but I am not seeing rational behavior among the fear porn peddlers.
We could use those ships to haul illegal entrants back where that came from. Gut ‘em and put in the bunk beds.
Got back today from a 4 day cruise on RCCL’s Independence of the Seas ship. Passenger capacity 4375, one of the staff people told us there were 2300 passengers on ship. So barely half full. Covid protocols on ship were good, no masks in dining rooms and bars and the main floor of theater, or any of the outside areas. Passengers wore masks mainly in elevators and hallways and anywhere children were present (very young kids are not required to be vaccinated to board the ship).
Staff was exceptionally friendly, no crowds anywhere, quality of cuisine was very good, and we saw 2 amazing shows, one on ice skating rink and other was “Grease”.
I didn’t read the article but I do have a rule about titles.
If a title is written as a question...the answer is always no.
They did for passengers everyone has to be vaxxed.. 5 and up ...
Much fewer big cruise ships running all around the world.
Much fewer big jet airplanes flying all around the world.
Sounds like a tree hugging environmentalists’ dream.
Every one over age 12 was fully vaxxed on ship, including the staff. The cruise finished without anyone getting sick with covid. Good times were had by all. One passenger had a life threatening emergency on the night before disembarking day. The ship stayed in Nassau for 3 extra hours in case the passenger needed to be transferred to local hospital in Nassau from ship’s infirmary. Captain announced the passenger was doing well and it was not covid related. I am guessing a heart attack.
Here is one of the expected problems for cruise lines.
It has been picked up on FR at:
https://freerepublic.com/focus/f-news/4018430/posts
NEW ORLEANS — Ten people aboard a Norwegian Cruise Line ship approaching New Orleans have tested positive for COVID-19, officials said Saturday night.
The Norwegian Breakaway had departed New Orleans on Nov. 28 and is due to return this weekend, According to Norwegian’s website, the company requires all passengers and crew members to have been vaccinated against the virus at least two weeks prior to departure.
I have friends on the Carnival Glory out of New Orleans left the same day ... a 14-day Panama cruise ...
I hope your friends are having a great cruise.
What I am interested in is how Norwegian Cruise Line reacts to this Covid outbreak.
We should know shortly, since they are in port now, and probably ready to sail tonight.
Will they take a business-as-usual approach, or postpone the next cruise? -Tom
If they found 10 then theres probably 20+ they dont have to get tested when they get back if theyre jabbed ...
I was supposed to leave Port Canaveral yesterday, but Carnival cancelled my booking because Im not jabbed..
I booked back in Feb when there was no unConstitutional mandate
I booked back in Feb when there was no unConstitutional mandate
Right now I am unvaccinated , because I cant find a vaccine (Experimental drug) that will prevent me from getting covid, or me spreading it. It is also looking like the "well if you get covid it won't be as bad," is starting to unravel. -Tom
Will they take a business-as-usual approach, or postpone the next cruise? -Tom
It appears the Norwegian Breakaway is going to go cruising again. -Tom
From THE HILL:
The company requires its passengers to be vaccinated against COVID-19 and said that its current schedule of departures remained unchanged. The ship that recently returned with the positive cases is scheduled to leave for another trip Sunday evening, according to The Associated Press.
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