Celestyal, Fred. Olsen pick up Carnival Corp. ships

Europe-based lines Celestyal Cruises and Fred. Olsen Cruise Lines both said they had purchased ships from Carnival Corp., which has said will shed 13 ships from its nine brands this year.

Greece-based Celestyal said it had acquired the 1993-built, 1,800-passenger Costa NeoRomantica from Costa Cruises, while Fred. Olsen said it had purchased the youngest pair of the four ships leaving Holland America Line's fleet.

The U.K.-based Fred. Olsen said it had acquired the Amsterdam, built-in 2000, and the Rotterdam, built-in 1997 and would rename them the Bolette and Borealis, respectively, both names of former Fred. Olsen ships.

"We have chosen these vessels as they will fit seamlessly into our existing fleet of small ships, each carrying under 1,500 guests, bringing with them new and larger public areas whilst not compromising on our small-ship experience," said Fred. Olsen Jr., chairman of Fred. Olsen Cruise Lines, in a statement. "This increase in our capacity demonstrates our confidence in the future. With over 170 years of seafaring history, we have sailed through many difficult periods. With these new additions to the fleet, we will come out of this current situation stronger than ever, ready to deliver the award-winning itineraries that we are famous for."

Celestyal's CEO, Chris Theophilides said that the NeoRomantica purchase is part of the line's strategic growth plan, despite being on pause until 2021.

"I'm delighted with the addition of this midsize cruise vessel to our fleet," Theophilides said in a statement. "She is ideally suited to our business model and is very well appointed following her significant transformation in 2012."

Details of the ship's delivery and deployment will be announced at a later date, Celestyal said. It is the second Costa ship to exit its fleet since Carnival Corp.'s announcement about shedding ships. The 23-year-old Costa Victoria was sold for scrap. 

Carnival Corp to dispose of 13 ships

Carnival Corp to dispose of 13 ships

Carnival Corporation has confirmed it will dispose of 13 ships across its brands as well as delaying the deliveries of new ships.

The cruise giant said the move to reduce its fleet size was in response to an expectation that “future capacity [will] be moderated by the phased re-entry of its ships. The 13 ships represent a 9% reduction in current capacity.

The news comes just days after it was confirmed P&O Cruises had sold one of its oldest vessels, Oceana.

Carnival Corp said it had agreements for the disposal of five ships and preliminary agreements for an additional three ships, all of which are expected to leave the fleet in the next 90 days.

It said these agreements were in addition to the sale of four ships which were announced prior to the current financial year.

On future deliveries, the company said it expects only five of the nine ships originally scheduled for delivery in the 2020 and 2021 to be delivered before the end of the 2021 financial year. It also expects ships that were scheduled to launch in 2022 and 2023 to move to alter delivery dates.

Arnold Donald, Carnival Corporation’s president and chief executive, said the decision meant his brands would emerge “leaner” and “more efficient”.

He said: “We have been transitioning the fleet into a prolonged pause and right-sizing our shoreside operations. We have already reduced operating costs by over $7 billion on an annualized basis and reduced capital expenditures also by more than $5 billion over the next 18 months. We have secured over $10 billion of additional liquidity to sustain another full year with additional flexibility remaining. We have aggressively shed assets while actively deferring new ship deliveries. We are working hard to resume operations while serving the best interests of public health with our way forward informed through consultation with medical experts and scientists from around the world.

Carnival cruises' Mardi Gras in Meyer Turku shipyard.

“We will emerge a leaner, more efficient company to optimize cash generation, pay down debt and position us to return to investment grade credit over time providing strong returns to our shareholders.”

In June, Carnival Corporation said it was speeding up the disposal of ships after a registered $2.4 billion adjusted net loss in the three months to May 31.

Carnival Corporation today said it had raised $10 billion through a series of financial transactions since March, adding that it had “taken significant actions to preserve cash and secure additional financing to maximise its liquidity.

It has also confirmed $8.8 billion of credit facilities to fund ship deliveries originally planned through to 2023.

In a trading update, Carnival Corporation claimed demand remained for 2021 sailings, despite “substantially reduced marketing and selling spend”. It said almost 60% of bookings in the first three weeks of June were new business bookings, with the remaining amount coming from guests using their Future Cruise Credits from a previously cancelled cruise.

Chief financial officer and chief accounting officer David Bernstein said: “Quickly recognising the financial situation, we took swift action to improve our liquidity by reducing expenses and leveraging our strong balance sheet to complete several capital transactions”.

Highlighting the cost of pausing its global operations, Carnival Corporation side its monthly average cash burn rate for the second half of 2020 would be an estimated amount of approximately $650 million, adding that it was looking at ways to reduce that figure.

Costa Cancels Cruises Into August

Costa Diadema above

Costa announced a further pause for all its cruises until August 15, 2020, and the cancellation of all cruises in Northern Europe for the remainder of the 2020 summer season, according to a statement.

"The decision is linked to the uncertainty on the gradual reopening of ports to cruise ships and the restrictions that may still be in place for the movements of people due to the COIVD-19 global pandemic. In addition, the Company is also communicating the cancellation of all future cruises of the Costa Victoria," the company said. 

In the meantime, Costa said it is working alongside all relevant authorities to define health protocols for a potential restart of cruises as soon as possible.

Costa Victoria sold for scrap

Costa Cruises confirmed that the Costa Victoria has left its fleet, with ownership transferred to a subsidiary of the San Giorgio del Porto shipyard. The ship awaits demolition.

Earlier this month, Costa parent company Carnival Corp. said plans were in place to remove six ships within 90 days, with more to come. Carnival Corp. accelerated plans already in place because of the Covid-19 pandemic. 

Last week, the 23-year-old Costa Victoria arrived in Piombino, Italy, where San Giorgio has a subsidiary yard, according to the city’s mayor. In a Facebook post, the mayor said that the 1,928-passenger ship was being prepared for demolition. 

Carnival Corp. had said in an earlier release that San Giorgio is the only Italian company listed in the Register of Environmental Ship Reclamation & Recycling Facilities and able to carry out green ship recycling projects. 

San Giorgio is the shipyard that carried out the recycling and demolition of the Costa Concordia after the ship ran aground and partly sank in January 2012.

Princess Cruises to deploy another ship to China

Golden Princess.

The Golden Princess will sail seasonal cruises from Tianjin in 2016, joining the Sapphire Princess in China.

The Sapphire Princess has been sailing seasonally from Shanghai since 2014 and will start sailing year-round from the port in 2016. Both ships carry about 2,600 passengers.

In addition, Princess Cruises will deploy a new 3,600-passenger ship to China in 2017, the cruise line said in May.

Another Carnival Corp. brand, Costa Cruises, will base four ships in China in 2016: the Fortuna, Serena, Atlantica and Victoria. Carnival Corp. announced in April that the Fortuna would be added to its China fleet.

"Our Costa and Princess brands are performing extremely well in China, and these new ship deployments will strengthen our growth position and enable us to carry nearly 1 million passengers in 2016," said Alan Buckelew, Carnival Corp.’s chief operations officer.

Competition for Chinese guests intensifies with Princess ship deployment

Shanghai Cruise Terminal

By sending its next ship to sail from Shanghai, Princess Cruises will vault into the vanguard of Western cruise lines seeking to source passengers from fast-growing China.

Princess said it will use the third ship in its Royal class, set for delivery in 2017, to establish a year-round presence in China, one of only three cruise lines to have done so.

The 3,560-passenger ship will be from the largest class of vessels that Princess sails, one-third larger than the 10-year-old Sapphire Princess, which begins its second season of summer sailings from Shanghai next week.

“Deploying our next new ship in China underscores our strong commitment to growing the China cruise market,” Princess President Jan Swartz said in a statement.

The move echoes the decision in April 2014 by Royal Caribbean International to commit the Quantum of the Seas to Shanghai even before it had been delivered. After six months of interim sailings, the ship left New York on a transit cruise May 2 and will begin year-round cruising in China in June.

At the time, Royal Caribbean CEO Adam Goldstein said the company felt it had an asset in the Quantum that was impossible to match.

The Princess ship, as yet unnamed, will be a follow-up to the Royal Princess and Regal Princess, which will remain on U.S.- and European-based itineraries. When they were introduced in 2013 and 2014, respectively, they made a splash with their protruding SeaWalk platforms, dancing water fountains and a pair of elegant chef’s table restaurants.

In addition to those features, the 2017 ship under construction at the Fincantieri shipyard in Italy will be customized for Chinese guests, using the Princess Class elements pioneered on the Sapphire Princess.

They include the World Leaders Dinner, a traditional English afternoon tea, a Lobster Grill, Ultimate Balcony Dining, an oceanview, hot-pot dinner option, ballroom dancing and expanded duty-free shopping.

“And as this ship is still in the design phase, we are looking forward to creating other new and exciting venues and experiences catering to the Chinese vacationer, which we will reveal in the coming months,” Swartz said.

In announcing the ship, Princess said it will be “the first year-round international luxury vessel designed and built specifically for Chinese guests.”

The announcement comes as competition begins in earnest for the Chinese customer.

On May 15, a joint venture between Royal Caribbean Cruises Ltd. and Chinese online travel agency Ctrip will begin sailing the former Celebrity Century from Shanghai.

The 1,800-passenger ship has undergone a renovation, which included the addition of an ice bar, a trampoline and minigolf as well as a makeover of the restaurants to tailor them to Chinese tastes. It will sail under the name SkySea Golden Era.

On May 21, the Sapphire Princess begins its second summer of sailings from Shanghai, followed by the arrival of the Quantum in June.

Carnival Corp. is also represented in the Chinese market by Costa Cruises, which has been sailing the Costa Serena from Shanghai since April.

In a note to investors issued after the Princess announcement, UBS Securities predicted that 2015 will be the tipping point for China to become a “game-changing force” for the cruise industry.

UBS analyst Robin Farley said China will not only provide a new source of demand but will reduce capacity and strengthen pricing in more mature markets such as North America and Europe.

The international cruise industry’s presence in China has been growing since 2008 when Costa first put a ship there dedicated to the Chinese market. Carnival Corp. sent then-Costa chairman Pier Luigi Foschi to oversee its Asian operations.

After Foschi left Carnival, former Princess Cruises president Alan Buckelew was named chief operations officer and was dispatched to China. Although Costa has two other ships, the Costa Victoria and Costa Atlantica, also sailing from China, the shift of a Princess newbuild to China will significantly step up Princess’ presence there.

After the 2017 delivery, Princess has no new ships on order, although Carnival Corp. recently announced an agreement in principle with two European shipyards to build nine vessels from 2019 to 2022.

Carnival Corp. has also agreed to explore a joint venture with Fincantieri and the China State Shipbuilding Corp. to develop the first “world-class cruise ship” to be built in China.

Norwegian Cruise Line has formed a task force to evaluate whether and how to enter the Chinese market. However, its largest shareholder is Genting Group, a Malaysia-based company that also owns Star Cruises, a line that is focused solely on the Asia market.

During the company’s earnings call last week, CEO Frank Del Rio said, “It is incredible to see our competitors devoting their newest, largest and probably best-performing ships to the Chinese market.”  He added that the Norwegian study group would deliver its findings by year’s end.