The Big Three Cruise Corporations Continue to Burn Cash. Here's How Much.

Carnival Corporation, Royal Caribbean Group and Norwegian Cruise Line Holdings are still burning through cash as some ships emerge from lay-up back into operations. 

Cash burn numbers may be up in the third quarter with added costs to reactivate ships, needed maintenance, potential drydocks, procurement, getting crew back and more.

Only one out of the three big cruise companies provided estimates on third-quarter cash burn, indicating it would be up close to 45 per cent. 

Carnival Corporation

For Carnival Corporation, the company's cash burn for the first half of 2021 was $500 million per month, which was better than a previous forecast of $550. The improvement was mainly due to the timing of cash received from ship sales just before the end of the second quarter and some other small working capital changes.

With ships quickly relaunching, and a short booking window for cruises announced close to departure, the company said it will not provide a forecast for its third-quarter cash burn rate.

Independence of the Seas in Southampton Photo credit Dave Jones

Royal Caribbean Group

Royal Caribbean reported its average monthly cash burn rate for the second quarter of 2021 at approximately $330 million, slightly higher than the prior quarter as the company returned additional ships into operation. 

Similar to Carnival, Royal Caribbean would be not providing a forecast for the third quarter.

"The environment remains fluid, and for this reason, we are not providing a cash burn estimate or the related offsets generated by revenue and new customer deposits. I will highlight that the burn rate for the ships that are kept at layoff is expected to be consistent with our previous expectations," said Jason Liberty, executive vice president and CFO, on the company's second-quarter earnings call.

Norwegian Star in Mexico Photo Credit Dave Jones

Norwegian Cruise Line Holdings

Norwegian Cruise Line Holdings said its average cash burn in the second quarter was $200 million per month, higher than its guidance of $190 million driven by the announcement of additional ship relaunches in the company's voyage resumption plan and the associated restart expenses.

"As for the third quarter, we expect our average monthly cash burn rate to increase to approximately $285 million as restart expenses accelerate with additional vessels entering service," said Mark Kempa, executive vice president and CFO. "Restart expenses are primarily related to repositioning, provisioning and stopping of vessels, implementing new health and safety protocols and a measured ramp-up of demand-generating marketing investments."

 

Carnival's Princess and Holland America Brands Mark Return to U.S. Cruising

Carnival Corporation brands Princess Cruises and Holland America Line held a celebration at the Port of Seattle today to mark their return to U.S. cruise operations. 

Jan Swartz, president of Princess Cruises, and Gus Antorcha, president of Holland America Line, spoke to what the positive impact the resumption of cruising means to Seattle, the local community and Alaska, according to a press release.

Holland America Line will kick off its Alaska season with Nieuw Amsterdam setting sail tomorrow, July 24, and Princess Cruises will follow with Majestic Princess sailing on July 25. Each line will operate ten cruises sailing out of Seattle through September. 

Both cruise lines have been homeporting out of the Port of Seattle for more than 20 years. Operationally, each ship visit directly contributes more than $364,000 to the local economy in provisioning (fuel, food, flowers, piano tuning, supplies), port taxes, and spending during a full season, according to a press release.

Pacific Princess Sold as Another Ship Leaves Carnival Corp. Fleet

Princess Cruise today announced the sale of Pacific Princess to an undisclosed buyer. The 670-guest ship was the smallest in the current Princess fleet.

The company said the sale of the cruise ship is in line with parent company Carnival Corporation’s plan to accelerate the removal of less efficient ships from its fleet, according to a statement.

The Pacific Princess first joined the cruise line’s fleet in 2002, and originally entered service in 1999 as R3 for Renaissance Cruises. 

The Pacific Princess sailed more than 1.6 million nautical miles and 11 world cruises. 

“Pacific Princess holds so many memories and cherished experiences to all who sailed upon her,” said Jan Swartz, Princess Cruises president. “Pacific Princess offered a traditional style of cruising to unique destinations. While it’s difficult to say goodbye to our ‘Love Boat,’ our World Cruise and exotic itineraries continue onboard our Medallion Class-enabled Island Princess and Coral Princess, featuring the best Wi-Fi at sea, allowing guests to keep in touch with loved ones and share vacation memories along the way.”

Cruise Line Stocks Surge on Monday on Vaccine News

Premarket on Monday, cruise line stocks surged up to the tune of between 20 to 30 per cent based on positive vaccine news.

Carnival Corporation was up 29.16 per cent; Royal Caribbean Group 21.05 per cent; Norwegian Cruise Line Holdings 25.81 per cent and Lindblad Expeditions 17.43 per cent in premarket trading. 

The positive momentum was driven by good news from clinical trials evaluating a COVID-19 vaccine from Pfizer and BioNTech. With multiple news outlets reporting vaccine trials were seen as more than 90 per cent effective. Drugmakers may apply for emergency use as soon as later this month.

Carnival Corp. Sells Two More Cruise Ships

Carnival Corporation's Princess Cruises has announced the sale of two of its ships, Sun Princess and Sea Princess, to undisclosed buyers.

The sale of these vessels is in line with parent company Carnival Corporation’s plan to accelerate the removal of less efficient ships from its fleet.

“Sun Princess and Sea Princess contributed to significant growth in Australian cruising,” said Princess Cruises president Jan Swartz. “Both ships defined the premium cruise experience with Australians and New Zealanders spending close to 14 million nights aboard these ships. While it is never easy to say goodbye to any ship in our fleet, this will allow us to deploy newer ships enhancing our offerings for Australia cruisers and focus on bringing into service exciting newbuilds like the upcoming delivery of Enchanted Princess.”

The first ship in the Sun Class, Sun Princess was introduced in 1995 debuting in the Caribbean and was among the largest ships in the world at the time.

The 2,000-guest Sun Princess also sailed in Alaska and Panama Canal, among other destinations, before being homeported in Australia in October 2007.

"The Sun Princess also helped us open the Japanese market in 2013 as the first foreign-flagged cruise ship to offer cruises designed specifically for the Japanese," the company said, in a statement.

The 2,000-guest Sea Princess meanwhile became synonymous with World Cruises, having completed six full world cruises since 2013. Prior to joining the Sun Princess in Australia, the Sea Princess sailed in Europe and Alaska as well as the Caribbean, including serving as a homeport ship in Barbados in the mid- to late-2000s.

Due to the imminent departure of these two ships from the fleet, Princess Cruises will cancel published itineraries which include:

• Sun Princess sailings from December 28, 2020, through August 14, 2021
• Sea Princess sailings from December 23, 2020, through November 9, 2021

Guests with bookings will be notified, and along with their travel advisors, will receive information on how to book another Princess Cruise when operations resume. Guests who prefer a refund will be accommodated.

 

P&O Cruises extends cancellation of sailings into 2021

All P&O Cruises sailings have been cancelled until early 2021, the line confirmed today.

All Caribbean cruises are cancelled until the end of January 2021 and departures from and to Southampton will not operate until February.

The ships Arcadia and Aurora have already seen cancellations through to the end of their spring world cruises.

Passengers with bookings on a cancelled cruise will be notified and automatically receive an enhanced 125% future cruise credit or a 100% refund by filling out a web form, according to the line.

P&O Cruises had extended its pause in operations until November 12 and cancelled two extended itineraries due to depart in January 2021.

The line’s previous pause was in June until October 15 due to Covid-19 restrictions on cruise operations.

P&O Cruises president Paul Ludlow said: “With evolving restrictions on travel from the UK, unfortunately, it is necessary to cancel these itineraries.

“These further cancellations vary according to ship as well as complexity and length of itineraries, advice and guidance regarding ports of call and current air availability for fly/cruises.

“We are continuing to monitor the overall situation closely and will certainly reintroduce cruises should the opportunity arise and it is feasible to do so.”

Ludlow confirmed that the Carnival Corporation company is working with several of the “most brilliant minds in science as well as government at the highest level” on approved and enhanced health protocols, which will be in place once the company resumes sailing.

He added: “Whilst adherence to the protocols on board and ongoing vigilance will be critical, this will always be coupled with providing the well-deserved and memorable holidays for which we are known, with all the standout moments on board and experiences onshore. This is what we have always done and will continue to do.

“We cannot wait for restrictions to ease, borders to open and for us to once again be able to set sail for a new beginning.”