Carnival Corporation agrees $3bn in borrowing as cruises halted

Carnival Corporation agrees $3bn in borrowing as cruises halted

Carnival Corporation is to borrow $3 billion under a credit agreement for six months as the coronavirus crisis triggered a shutdown of global cruise operations.

Tapping the credit facility will increase the group’s cash position and “preserve financial flexibility in light of current uncertainty in the global markets resulting from the Covid-19 outbreak”.

The proceeds from the borrowings will be available to be used for working capital, general corporate or other purposes, the corporation said.

The move to bolster the world’s largest cruise company’s financial position came as its UK brands, P&O Cruises and Cunard, suspended operations until April 11 after other brands such as Princess Cruises paused operations.

Carnival Corporation said: “Due to the spread and recent developments, including growing port restrictions around the world, related to the Covid-19 outbreak, the corporation previously announced a voluntary and temporary pause of its fleet cruise operations by its continental Europe and North American brands.

“Subsequently, the corporation implemented a temporary pause of its global fleet cruise operations across all brands. Each brand has separately announced the duration of its pause.

“Significant events affecting travel, including Covid-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions.

“The corporation believes the ongoing effects of Covid-19 on its operations and global bookings will have a material negative impact on its financial results and liquidity.

“The corporation is taking additional actions to improve its liquidity, including capital expenditure and expense reductions, and pursuing additional financing.

“Given the uncertainly of the situation, the corporation is currently unable to provide an earnings forecast, however, we expect results of operations for the fiscal year ending November 30, 2020, to result in a net loss.”

The group’s cruise lines operate 105 ships with 16 new vessels due to be delivered by 2025.