Norwegian Cruise Line reports $1.9bn loss

Norwegian Cruise Line reports $1.9bn loss

Norwegian Cruise Line reported a first-quarter loss of $1.9 billion, with the impact of a coronavirus-enforced suspension of sailings exacerbated by a $1.6 billion write-down in goodwill.

However, Norwegian Cruise Line insisted it is now “well-positioned” to withstand even 18 months of suspended operations after raising $2.4 billion in funds in early May.

Norwegian Cruise Line president and chief executive officer Frank Del Rio said: “We’ve taken decisive action to strengthen our financial position, including our highly successful and oversubscribed $2.4 billion capital raise announced last week.

“We believe this, coupled with other liquidity-enhancing initiatives, makes us well-positioned to weather an unlikely scenario of over 18 months of suspended voyages.”

Del Rio added: “We continue to experience demand for voyages in the future across our three brands.

“As we prepare to resume sailings, we’re working alongside the US and global public health agencies and governments to develop and implement enhanced cruise health and safety standards.”

He reported, “demand for cruise vacations particularly beginning in the fourth quarter of 2020, accelerating through 2021”.

Norwegian described overall bookings and pricing for 2021 as “within historical ranges”.

The cruise line noted all three of its brands had begun the year “in a record booked position and at higher prices” than last year despite a 7% increase in capacity.

However, it reported “slightly over half of the guests” had declined to rebook or accept cruise credits in place of cash refunds for cancelled cruises despite being offered “typically 125% of the cruise fare paid.

The company’s credits are valid through to the end of December 2022.

Norwegian revealed it had $1.8 billion of advance ticket sales at the end March, of which $800 million were for cancelled voyages to the end of June and $370 million for voyages scheduled for the second half of this year.

The company said it continues to take bookings for later this year, 2021 and 2022, and to receive new deposits and final payments.

Norwegian reported it has pared its operating costs to between $70 million and $110 million per month while voyages are suspended, following a series of cost-cutting measures.

Additional capital-spending reductions and deferred debt payments mean its monthly cash burn has been reduced to between $120 million and $160 million per month.

However, this excludes cash refunds to customers.

Norwegian noted it had debts totalling $8.6 billion at the end of March, with available cash and cash equivalents of just $1.4 billion.

However, a series of capital markets transactions launched on May 5 had raised $2.4 billion, including a $400 million investment by US private equity firm L Catterton.

Norwegian Cruise Line chief financial officer Mark Kempa said: “Our swift actions to preserve cash and secure additional liquidity provide a strong foundation to withstand the operational and financial impact of Covid-19.

“We are confident the company can navigate through an unlikely extended zero-revenue scenario and emerge in a strong position.”

P&O Cruises pledges to speed up refund payments

P&O Cruises pledges to speed up refund payments

The boss of P&O Cruises has pledged new technology and resources to speed up the payment of refunds for cancelled cruises.

President Paul Ludlow took to social media to outline measures the company is making to speed up the refund process.

The Facebook posting, which came after parent company Carnival UK confirmed staff consultation on redundancies after a pause in operations, had attracted 1,700 views as of Thursday morning.

Ludlow said he was “very aware of how imperative it is that those of you who opted for a refund, instead of an enhanced Future Cruise Credit, receive your money back as swiftly as possible”.

He added: “We are proud to be a travel company which is able to offer refunds but the impact of Covid-19 upon our business, your businesses, and all of our lives has been devastating, and therefore the complexity and scale of this task has been unprecedented for us.

“At P&O Cruises, we have had to adapt our ways of working very quickly as we set up new systems and all our colleagues began working from home.

“I understand that some of you see us as a big business ‘holding on to your money’ as some of our guests have been commenting publicly, but I assure you I am very aware of the financial constraints everyone is under at the moment and we are not delaying this intentionally.”

The first cruises were cancelled due to Covid-19 in the middle of March “and whilst we expected to process the first refunds sooner, we revised that to ‘up to 60 days’ when we realised the impact the pandemic was having on our wider business and teams,” Ludlow said.

“I know that ‘up to 60 days’ is not ideal and it is certainly not the service you would normally expect from us but sadly ‘normal’ has taken on a new meaning.

“In the past few weeks, despite the challenges, we have been able to put new technology and systems and also an additional resource in place which will result in more refunds being processed more quickly and I hope this will improve the situation daily. We will also be contacting all of you who have requested a refund.”

The line’s systems are also being amended to allow enhanced 125% FCCs to be able to be redeemed online without the need to call, with more details expected at the end of May.

Customers now have until the end of December 2021 to put their FCC against a booking for any holiday on sale during that period.

FCCs may now be used to upgrade or for a second cabin for any booking in 2021 or 2022 departure period currently on sale and may also be gifted or transferred to someone else.

“This option too will apply to further out departures as and when they go on sale, until as stated above, the end of December 2021,” Ludlow said.

Royal Caribbean puts up 28 ships as collateral for $3.2bn bond

Royal Caribbean puts up 28 ships as collateral for $3.2bn bond

Royal Caribbean fleet fact sheet.

Royal Caribbean Cruises has launched a $3.2 billion bond offering while pledging 28 of its ships and “material intellectual property” as collateral.

The move followed the world’s second-largest cruise group forecasting heavy losses for the first quarter of the year as Covid-19 brought global sailings to a standstill.

The company expects to report a preliminary first-quarter net loss of $1.44 billion compared to a profit of $249.7 million a year earlier.

Royal Caribbean, which was forced to suspend its cruises globally and cut about 23% of its US workforce, said the health crisis has dented its quarterly net income by about $453 million.

Preliminary total revenue for the three months ended March 31 fell 16.7% to $2 billion against the same period last year.

Royal Caribbean declined to specify which ships it had pledged for its debt offering. It had vessels with a net book value of about $22.7 billion as of December 31, including Symphony of the Seas, the world’s largest cruise ship.

The net proceeds from the offering of the $3.3 billion notes will be used to repay a $2.35 billion 364-day loan.

The remainder will be used for “general corporate purposes, which may include repayment of additional indebtedness”.

The parent company of Royal Caribbean International, Celebrity Cruises, Azamara and Silversea, estimates its cash burn to be about $250 million to $275 million a month during a prolonged suspension of operations.

Royal Caribbean Announces Proposed Offering Of $3.3 Billion Senior Secured Notes

Royal Caribbean Cruises today announced that it has commenced a private offering of senior secured notes to be issued by the company in separate series of notes due 2023 and 2025, for an aggregate principal amount of $3.3 billion.

The Notes and the related guarantees will be secured by 28 of the company's vessels and material intellectual property of the company. The obligations under the Notes and the related guarantees will be secured by the collateral in an amount not to exceed permitted capacity under the company's existing indebtedness.

The company expects to use the net proceeds from the offering of the Notes to repay its $2.35 billion 364-day senior secured term loan agreement with Morgan Stanley Senior Funding, Inc., as the administrative agent and collateral agent and the other lenders' party thereto entered into on March 23, 2020. The company expects to use the remaining net proceeds for general corporate purposes, which may include repayment of additional indebtedness.

TUI Expects to Restart Cruise Ships With Less Occupancy, More Changes

Tui's new Mein Schiff 2

TUI Group has said it expects to restart cruise service this summer, but with less occupancy.

The company, which oversees the TUI, Hapag-Lloyd and Marella brands, said the changes will start at boarding, with new health questionnaires. screening preboarding and staggered boarding groups.

The company also said it plans to start with less than 1,000 guests on each ship until August 31, 2020, meaning TUI's big ships, with capacity for just under 3,000 guests, would be sailing at approximately one-third occupancy, allowing for much more distance in public areas.

Other changes include the elimination of self-service food. Public venues will also be limited to one-third of their capacity. Only 10 children will be allowed in the Kids’ Club aboard, the company said.

In addition, the ships will operate at what TUI called OPP-3 (Outbreak Prevention Plan Level 3), meaning constant cleaning of touched services, every 30 minutes or less. The company said it expects to have COVID-19 testing capabilities aboard with additional medical staff.

The cruise line will work closely with ports to develop joint procedures to handle any possible COVID-19 cases, according to a statement.

It’s not a great time to woo first-time cruisers

Cruise ships in Costa Maya, Mexico. Photo Credit: Byvalet/Shutterstock

In January, Jessica Fricchione and 10 of her family members booked what would have been her first cruise, a Bermuda sailing out of Baltimore leaving on May 31. 

Due to the coronavirus crisis, the group’s sailing was cancelled -- and they have no interest in taking a future cruise credit.

“No one in the family wants to book a cruise again,” she said, adding that they were looking into a stay at an all-inclusive resort instead. “I don’t ever, ever want to be stuck on a cruise ship.”

Justified or not, the cruise industry’s reputation took a hit from the high-profile Covid-19 outbreaks on a handful of ships in March and April. 

Industry stakeholders acknowledge that media coverage of those ships being turned away from ports and, in some cases, of passengers being quarantined in their cabins for weeks on end is most likely to have an impact on the potential-cruiser set. 

In a media call last month, Carnival Corp. CEO Arnold Donald said there was “no question” that the media attention would have an impact on that market segment. 

“There have been people who may have been considering [a cruise] who would be having second thoughts at this point in time,” he said. 

The first-time cruiser has always been considered critical to the growth of cruising. Despite CLIA lines’ global passenger growth of about 60% since 2009, to 30 million in 2019, cruising is still vastly underpenetrated compared with other vacations: 11.9 million Americans cruised in 2019, only about 3% of the population.

Travel advisors expect that the crisis will cause a decline in the new-to-cruise market.

“When you’re dealing with first-time cruisers, you typically have to overcome some fear of the unknown with cruising, such as seasickness, boredom, claustrophobia,” said Anthony Hamawy, President of Cruise.com. “The current negative press around cruising will add to those fears.”

Signature Travel Network CEO Alex Sharpe said that those who’ve never been on a cruise can’t draw upon personal experience to put into perspective what they are seeing and hearing from the media.

“If you’ve been watching the news and you’re not a cruiser and you can’t put what [ships with Covid-19 outbreaks] have been through in any context with your own family’s great times on a ship, it’s hard to reconcile that and say, ‘That’s my next vacation,’” Sharpe said. “I think new-to-cruise will take a hit in the short term. That will take some time.”

Some cruise lines have found that booked passengers who were new to cruise have been more likely to cancel cruises they had booked during the current operations pause.

Mark Conroy, Silversea Cruises’ managing director of the Americas, said that new cruisers have been more likely than past passengers to cancel and take a refund versus a future cruise credit because they are “more nervous.”

Loyalty program members “will come back first,” he said. “They’re the people that know us and love us and travel with us every year or every other year. They’re the ones that are eager to go.”

Repeat cruisers will lead the way

Many think that those who were once potential cruisers and are now on the fence can be swayed back once cruise lines are up and running. 

Charles Sylvia, CLIA’s vice president of membership and trade relations, said that there will be “more challenges ahead with regard to the first-time cruisers” but that people returning from cruises with positive stories will put them at ease. 

“Once they see the resumption of operations and once they see friends and family members and co-workers going on cruises and coming home with that same level of enthusiasm and satisfaction, then they will be back -- the first-time cruisers will come to us,” Sylvia said. 

Donald also said that returning cruise passengers, as well as travel advisors, will be the most important messengers in overcoming the additional concerns non-cruisers have. He added that this is something the industry is accustomed to dealing with. 

“We were busy knocking down myths before, and we’ll have to return to that,” he said, adding that the two “most powerful ways” to do that are through travel advisors, “with their knowledge and experience and personal relations with their clients,” and the passengers, who will “provide the kind of testimonials and credibility with their friends and colleagues and relatives.” 

And as has always been true for travel coming out of every crisis, for some people, the right price is a big persuader. 

“I think, with time, this will be overcome because the vacation value will ultimately win out,” Hamawy said.

Branson to sell $500m space venture stake to support Virgin Atlantic

Branson to sell $500m space venture stake to support Virgin Atlantic

Sir Richard Branson aims to shore up his airline and travel interests hit by the coronavirus global travel shutdown by selling $500 million in Virgin Galactic shares.

Virgin Group told the New York Stock Exchange it planned to sell 25 million shares in the space tourism venture in a series of transactions.

The company said: “Virgin intends to use any proceeds to support its portfolio of global leisure, holiday and travel businesses that have been affected by the unprecedented impact of Covid-19.”

The freeze in global travel is affecting a host of Virgin Group companies, including Virgin Atlantic as well as its holidays, cruises and hotels businesses.

Virgin Atlantic last week announced it would cut 3,150 jobs, move it Gatwick operation to Heathrow and rebrand Virgin Holidays.

Chief executive Shai Weiss insisted at the weekend that he was “100% confident” the airline can survive the Covid-19 crisis.

The airline, in which founder Branson still holds a majority 51% stake, has been seeking emergency investment as well as some form of state aid while the majority of its fleet remains grounded.

About a dozen investment groups have been reported as showing interest in the UK long-haul carrier while talks continue with the Treasury and transport secretary Grant Shapps.

The airline was told last month that it needed to resubmit a £500 million bid for government state aid amid reports the Treasury had felt the carrier had nit exhausted other options.

Virgin Australia entered administration last month as the airline industry struggles to survive global travel restrictions imposed as a result of the Covid-19 pandemic.

Carnival Cruise bookings up 600 PERCENT

Carnival Cruise bookings up 600 PERCENT

• Carnival Cruise Line bookings rose 600 per cent after the company said it will resume some of its cruises in August
• That's 200 per cent more bookings than this same time last year, reports a travel industry representative
• Customers were primarily focused on locking down reservations and getting premium deals, says an American Express travel agent 
• Most of the travellers calling are described as young, healthy and eager to travel after being forced to stay home during COVID-19 lockdowns
• The customers are 'not a bit concerned about travelling at this time,' says the representative

Carnival Cruise Line bookings rose 600 per cent after the company said it will resume some of its cruises in August, says a member of the travel industry.

The sharp rise in bookings is 200 per cent higher than this same time last year, reports an American Express travel agent.

Customers were primarily focused on locking down reservations and getting premium deals, says the agent.

Most of the travellers calling in at the moment were described as young, healthy and eager to travel after being forced to stay home during nationwide coronavirus quarantines, TMZ reports.

The customers are 'not a bit concerned about travelling at this time,' the representative told the news outlet.

So far, there have been 1,366,962 confirmed cases in the US of the coronavirus, which has been blamed for 80,696 deaths. 

An Instagram post from Carnival explains that 'enhanced protocols and social gathering guidelines will be put in place' once the company starts sailing again.

While Carnival says it hopes to get back on the high seas by August, the company warns that plans could change and that there are no guarantees because of the potential for further delays due to the coronavirus pandemic.

'We continue to work with various government agencies, including the CDC, as we introduce new onboard protocols, but there is no assurance of a return on August 1,' Carnival wrote in its announcement.

Carnival had previously hoped to return in April or May after it first suspended its voyages in March. The date was later pushed to June 26 and now August 1. 

One-fifth of all global ocean cruise ships were infected with the coronavirus after the outbreak began, leaving at least 2,592 crew and passengers infected and killing at least 65, according to research compiled last month detailing the pandemic's impact on the cruise ship industry.

The data revealed that cases of the deadly virus were directly linked to at least 54 cruise ships, as they continued to travel the waters while the pandemic ravaged communities on land.

All four of the world's largest cruise lines - Carnival, Royal Caribbean Cruises, Norwegian Cruise Line Holdings and MSC Cruises - were struck by outbreaks, as well as several smaller lines.

At least 922 of those infected and 11 who died were crew members working on the ships.

The stark findings, collated into a study by the Miami Herald using data from the CDC, cruise companies and passenger testimonies, show that the situation on board ships was far worse than official figures revealed. 

When the Major Cruise Lines Plan to Restart Service

The major cruise lines are planning to start operations again this summer. 

Carnival Cruise Line

Carnival Cruise Line, in an update, said it intends to start cruising again with some ships in North America starting on August 1, while other itineraries and ships are projected to start service again later this year. Carnival plans to have eight ships in service from Miami, Port Canaveral and Galveston on short cruises.

Royal Caribbean International

Royal Caribbean announced it had extended its suspension of sailing for its global fleet through June 11, 2020.

The company said it plans to return to service on June 12, 2020, with some previously announced exceptions.

The most crew is also being sent home.

MSC Cruises

MSC Cruises announced a further extension of the halting of all its new cruise departures fleetwide through to July 10.

MSC Cruises USA is offering guests affected by this measure a Future Cruise Credit (FCC) where they have the opportunity to transfer the full amount paid for their cancelled cruise plus an additional 25 per cent credit to a future cruise of their choice, on any ship and any itinerary, departing on or before December 31, 2021.

Norwegian Cruise Line

Norwegian Cruise Line announced in late April an extension of its pause of service through the end of June. Norwegian Cruise Line Holdings recently raised enough capital to keep it going in a zero-revenue situation through early 2021.

Costa Cruises

Costa ships are out of service through early July at this point.

Princess Cruises

Princess Cruises, in a recent update, cancelled the remainder of its summer season. 

AIDA Cruises

All AIDA sailings through June 30 are currently cancelled.

Celebrity Cruises

Royal Caribbean, which owns Celebrity, announced it had extended its suspension of sailing for its global fleet through June 11, 2020.

Holland America Line

Holland America Line has extended its pause of global cruise operations and cancel all Alaska, Europe and Canada/New England cruises for 2020, according to a press release.

In addition, Amsterdam will not operate the 79-day Grand Africa Voyage from Boston, Massachusetts, to Fort Lauderdale, Florida, that was scheduled to depart on Oct. 3, 2020.

TUI Cruises

German brand TUI Cruises has hit pause through June 11, in line with Royal Caribbean, which is a partner in TUI Cruises in a joint venture arrangement.

Marella Cruises

Should it be safe to set sail, Marella Cruises will commence its summer 2020 program in July 2020, with three of its five ships sailing. More details here.

Bahamas Paradise

Sailings will resume onboard Grand Celebration on June 13 and onboard Grand Classica on July 10, according to a press release.

Hurtigruten

Hurtigruten is planning for a gradual restart of operations on the Norwegian coast. The first planned departure will be Finnmarken from Bergen on June 16.

Commission management software available for free

Commission tracking and management solution Sion has launched out of beta testing and is available free of charge.

The software solution was developed by travel advisor Irving Betesh, who is also Sion's CEO and co-founder.

Sion, which gives advisors a big-picture look at bookings and open invoices to track owed commissions, has an integration with Sabre and a partnership with Amadeus. It graduated from Virtuoso's Incubator program.

Sion is free at launch because of the coronavirus pandemic's impact on the travel industry.

"There has never been a more applicable time for travel advisors to need to collect all their outstanding commissions," Betesh said. "Though we never intended to launch our platform for free, we really wanted to do our part to help."

Frank Del Rio on travel advisors: 'I know what they're going through'

Frank Del Rio at CruiseWorld in 2016. Photo Credit: Ed McDonald Photography

In the second of two parts of a wide-ranging interview with Travel Weekly editor in chief Arnie Weissmann, Norwegian Cruise Line Holdings CEO Frank Del Rio talked about relaunching operations and the importance of travel advisors in the cruise industry's recovery. Part 1: Del Rio on closing a $2.4 billion round in tough times.

Remarking that the Covid-19 crisis has put travel advisors under "tremendous stress," Norwegian Cruise Line Holdings CEO Frank Del Rio said he speaks with at least two or three agents every day.

"We believe in a strong agency distribution system," Del Rio said. "Before the pandemic, our company had the highest yield in the industry, which meant that travel agents were earning the most by selling our three brands [Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises].

"I know what they're going through, and we've got to be able to do the things we need to do to make sure they survive. The cruise industry without travel agents would be like pancakes without maple syrup. It just doesn't work.

"Yesterday, I got an email from a travel agent who I'm very close to, and she says, 'Frank, I've got dozens of people who want to book -- when are you going to reopen?'

"So, I picked up the phone and I called Jan [Fishbein, of Cruzunlimited]. Jan is in her early 80s. She has been a travel agent for the last 30 years. I know Jan well because she was the first travel agent to make a booking in 2003 when we opened Oceania.

Oceana cruise ship Marina.

"I called her and the first question I asked was, 'Jan, how old are these customers that you claim to want to cruise?' She said, 'Frank, they're my normal customers, they're senior citizens, they're in their 70s.' I go, 'Really, Jan? And they want to cruise?' 'Yeah. Why not?'

"I said, 'Where do they want to cruise?' 'Well, they want to cruise in August and September; some want to go in the Caribbean, some want to go to Alaska, there's a few that want to go through the Panama Canal.'

"She's pushing me -- 'When are you going to open? When are you going to open?' -- and I say, 'Jan, I'm working on it! I'm working on it! It's not just up to me.'

"But it gave me such encouragement. When you combine those types of conversations with the numbers that we're seeing, if that doesn't give you a reason to have hope and be encouraged, I don't know what does."

The numbers that Del Rio is seeing that give him encouragement go backwards and forward in time, and reflect, he believes, strong pent-up demand.

"2021 bookings are only slightly behind where 2020 bookings were a year ago," he said. "Prior to coronavirus, 2020 was going to be, by far, the best year ever. And now, with travel agents not working at full strength, with our sales and marketing teams shut down, with the terrible news cycle that we've gone through, we can still say that we're only slightly behind, and at modest reduction -- mid-single digits -- in price. This is a testimony to the resiliency of the customer and the efforts of the travel agents to preserve those customers."

Carnival Breez

And when Del Rio's longtime travel agent friend Jan Fishbein gets her wish and sailing resumes, Del Rio also plans a gradual resumption, but with a different approach from that of Carnival Corp., which has announced an Aug. 1 relaunch for Carnival Cruise Line.

"We're not looking at it like that at all," Del Rio said. "We're looking at a gradual start; we're not certain when that date is, because everything depends on the [Centers for Disease Control and Prevention] lifting the no-sail order. Whenever we do start, we'll begin with a handful of ships across the three brands. So, let's say in month one, we open up with five ships; it could be three Norwegian, one Oceania and one Regent. I don't understand the concept of how one brand could be completely open and multiple brands can be completely closed. That's mind-boggling to me. We will start across all three brands, and whenever month two is, we'll bring alongside another four, five, six ships. We think it will take roughly six months from whenever we start until when all 28 ships across the three brands are back in full service."

Del Rio said he was unconcerned that some ports might not be welcoming visitors when sailing resumes. "We visit over 500 ports around the world. And cruise lines put forth their itineraries more than two years in advance. Today, we're selling itineraries through the fall of 2022, and we don't know at this point which ports are going to be open, which ports are going to be closed. I'm not going to prejudge changing itineraries. We'll have to play it by ear; it may be that when we open a certain itinerary, a port or two on that itinerary may not be operational and we'll have to make changes. We'll go to another port in the neighbourhood. We have flexibility because, especially in Europe, it's condensed geography. There's always an alternative port to go to nearby. The good news is we're flexible, we're nimble, and ships have propellers and rudders. We can move them around as necessary." 

Disney CEO Confident on Cruise; New Ships Could Be Delayed

Speaking on the company's second-quarter earnings call, Walt Disney Company CEO Bob Chapek was bullish on the future of Disney Cruise Line but admitted cruises may be among the company's last businesses to come back online.

"And in terms of the cruise ship business, we agree that that will probably be the last of our travel-oriented businesses to come back online," Chapek said.

"Interestingly enough long term all of our data and our research shows that our guests will be just as interested in cruising with us long term. Obviously not in the next few months but much more resilient than any of the competitive businesses because of that love for Disney and assurance that they feel, that they trust our business to act in a responsible way to help to the extent possible protect them against some of the woes that have plagued the industry since COVID has hit."

Disney Cruise Line operates four ships: the Magic, Wonder, Dream and Fantasy.

The brand has three more ships on order for introductions in 2021, 2022 and 2023.

The company is also anticipating delays to its newbuild schedule, according to an SEC filing.

"The company has credit facilities to finance three new cruise ships, which were to be delivered in 2021, 2022 and 2023 although delays are now expected as a result of the COVID-19 impact on the shipyard," Disney stated.

Disney World Eyes Phased Reopening With Limited Capacity, Enhanced Safety Measures

Main Entrance to Walt Disney World Florida photo credit Dave Jones.

Disney Springs has announced it will begin a phased reopening on May 20 with limited capacity, parking and operating hours.

Under the initial phase, a limited number of shopping and dining experiences owned by third-party operating participants will open.

Walt Disney World Resort also issued an update on its overall reopening strategy on Thursday, stopping short of announcing a reopening date but confirming that it will limit capacity and encourage social distancing in an effort to slow the spread of coronavirus.

"Upon reopening, theme parks, Disney Resort hotels, restaurants, attractions, experiences and other offerings may be modified and will be limited in capacity and subject to limited availability or closure, based on direction from health experts and government officials to promote physical distancing," Disney said.

"Additionally, attractions, experiences, services and amenities may have limited availability or may remain closed. We will provide more information as it becomes available. We reserve the right to cancel any reservations, admission media or purchases and provide applicable refunds. Please also see our policies regarding cancellations by guests," the update reads. "Our focus remains on the health and safety of the entire Disney community—including the well-being of the cast members who are caring for and securing our parks and Resorts during the closure. We’re currently evaluating new and enhanced safety measures to help us all stay well."

The update comes on the heels of a message from Disney Parks Chief Medical Officer Dr Pamela Hymel outlining the steps the company will take to safely reopen.

Shanghai Disneyland is scheduled to reopen with controlled capacity on Monday.

Disney has reported massive losses since temporarily closing its parks in mid-March. However, a new report predicts a positive long-term outlook for theme parks in the wake of the COVID-19 crisis.

Royal Caribbean Updates Measures Taken to Weather COVID-19 Pandemic

PHOTO: Anthem of the Seas' pool deck at sunset. (photo courtesy of Royal Caribbean International)

Royal Caribbean Cruises Ltd. (RCCL) on May 8 provided a business update on how it is shoring up liquidity, reducing expenses, and upgrading cleaning and disinfection protocols amid the Covid-19 pandemic.

“These are unprecedented times for all of us. Travel restrictions and stay-at-home orders are important to slowing the spread of the virus, but they have severely impacted our operations,” said Chairman and CEO Richard D. Fain. “We are taking decisive actions to prioritize the safety of our guests and crew while protecting our fleet and bolstering liquidity.”

RCCL brands – including Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises – have suspended operations through at least June 11. The corporation said continued disruptions to travel and port operations may result in further suspensions.

“Our top priority is to ensure the safety of our guests and crew during the suspension period and when we resume operations," Fain said. “The company’s fleet is now either in port or at anchor and we have developed strict protocols to protect our crew that is still on board our ships.”

RCCL also has arranging to shore up its liquidity and, as of April 30, had liquidity of approximately $2.3 billion in cash and cash equivalents. On May 4, the company increased the 364-day senior secured credit facility and drew $150 million, further enhancing the company’s liquidity profile.

“Since late January, we have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19,” said Jason T. Liberty, executive vice president and CFO. “Our focus is on bolstering liquidity through significant cost-cutting, capital spends reductions, and other cash conservation measures. In addition, the company is considering additional financing sources. We continue to evaluate all options available to us to further enhance liquidity.”

To reduce expenses, RCCL has significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges.

The company reduced its workforce by about 26 per cent, eliminated or significantly reduced marketing and selling expenses for the remainder of 2020, and suspended travel and instituted a hiring freeze.

“The company estimates that its average ongoing ship operating expenses and administrative expenses is approximately $150 million to $170 million per month during the suspension of operations,” the business update said. “The company may seek to further reduce this average monthly requirement under a prolonged non-revenue scenario.”

The company also has identified approximately $3 billion and $1.4 billion of capital expenditure reductions or deferrals in 2020 and 2021, respectively. Shipyard operations have been impacted, so there will be delays of new ships previously planned for delivery in 2020 and 2021.

The company estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month during a suspension of operations.

At the beginning of 2020, RCCL was looking at a strong booking pattern at higher prices than the previous year.

“Given the impact of Covid-19, booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down low-single digits,” the RCCL statement said. “Due to the suspension in sailings, booking trends reflect elevated cancellations for 2020 and more typical levels for 2021 and beyond. Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to the same time last year with 2021 prices up mid-single digits compared to 2020.”

As of March 31, the company had $2.4 billion in customer deposits. This includes approximately $800 million of future cruise credits related to voyage cancellations through June 11. The company also continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings.

The company previously withdrew its first-quarter and full-year 2020 guidance. “The magnitude, duration and speed of Covid-19 remain uncertain. As a consequence, we cannot estimate the impact of Covid-19 on our business, financial condition or near- or longer-term financial or operational results with reasonable certainty, but we expect to incur a net loss” for the first quarter and the 2020 fiscal year, “the extent of which will depend on the timing and extent of our return to service.”

Meanwhile, the company has been developing a plan to address the health challenges posed by Covid-19. It includes enhanced screening, upgraded cleaning and disinfection protocols, and plans for social distancing.

RCCL continues to work with the Centers for Disease Control and Prevention, global public health authorities, and national and local governments to enhance measures to protect the health, safety and security of guests, crew and the communities visited when operations resume.

Royal Caribbean reveals numbers seeking refunds

Royal Caribbean reveals numbers seeking refunds

Royal Caribbean Cruises has revealed just under half of its customers have requested cash refunds for cancelled cruises, with its operations currently suspended through to June 11.

In a business update, Royal Caribbean revealed it was holding $2.4 billion in customer deposits at the end of March and said, as of April 30, “approximately 45% of guests have requested cash refunds”.

The cruise giant is offering clients with cancelled bookings credits for future cruises worth 125% of the price they paid in lieu of cash refunds.

Royal Caribbean reported it started the year “in a strong booked position and at higher prices” than the previous year, but said: “Booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down [in] low-single digits.”

However, the company described booking trends for 2021 and beyond as at “more typical levels”, reporting: “The booked position for 2021 is within historical ranges . . . with 2021 prices up [in] mid-single digits compared to 2020.”

Royal Caribbean confirmed it continues to take future bookings for later this year, 2021 and 2022 and to “receive new customer deposits and final payments on these”.

Richard Fain, Royal Caribbean chairman and chief executive, said: “Travel restrictions and stay-at-home orders have severely impacted our operations.

“We are taking decisive actions to prioritise the safety of our guests and crew while protecting our fleet and bolstering liquidity.”

He reported: “The company’s fleet is now either in port or at anchor and we have developed strict protocols to protect our crew still on board ships.”

Royal Caribbean said it was developing “a comprehensive and multi-faceted programme” to address the public health challenges posed by Covid-19, including “enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing”.

Chief financial officer Jason Liberty reported the company had also undertaken “significant cost-cutting, capital spend reductions and other cash conservation measures” and said: “We continue to evaluate all options available to us to further enhance liquidity.”

The company had $2.3 billion in cash and cash equivalents available to it at the end of April and increased its secured credit facility on May 4.

Royal Caribbean’s ships “are currently transitioning into various levels of layup, with several ships transitioning into a cold layup, further reducing operating expenses”, he said.

The company has laid-off about one-quarter of its 5,000 US onshore employees and identified $4.4 billion in savings on capital expenditure this year and next.

This will see the deferral and delay of planned ship deliveries.

However, these measures have still left Royal Caribbean with operating expenses of $150 million to $170 million a month and total monthly expenses, including interest and debt payments, of up to $275 million.

Portsmouth Marine Terminal to Host Trio of Norwegian Ships

Portsmouth Marine Terminal to Host Trio of Norwegian Ships

Norwegian Bliss

The Norwegian Bliss, Encore and Spirit will arrive at Portsmouth Marine Terminal starting Monday for an extended stay.

The ships have previously been anchored in the Bahamas while moving in out of ports in South Florida to bunker supplies, transfer crew and more.

All three ships will have minimal crew aboard as Norwegian transitions its fleet to cold layup.

Under stress, NCL Holdings hit a liquidity grand slam

Arnie Weissmann (left) and Frank Del Rio at Travel Weekly's CruiseWorld in 2018. Photo Credit: Jamie Biesiada

In the first of two parts of a wide-ranging interview with Travel Weekly editor in chief Arnie Weissmann, Norwegian Cruise Line Holdings CEO Frank Del Rio gave the back story on closing a $2.4 billion round in tough times. Part 2: Del Rio on relaunching and the importance of travel advisors in cruising’s recovery. 

On March 13, Norwegian Cruise Line Holdings CEO Frank Del Rio learned that to stem the spread of Covid-19 on cruise ships, the Centers for Disease Control and Prevention (CDC) had issued a no-sail order, effectively halting cruising out of U.S. ports.

No cruising, no revenue. No revenue, no assurance of the liquidity needed to survive for an unknowable amount of time. “I knew our world was going to change,” Del Rio told Travel Weekly in an interview on Thursday.

Del Rio sees the journey from potential ruin to bountiful liquidity as a testimony to the resiliency of cruising and NCLH’s unique position in the cruising ecosystem.

On Wednesday, Del Rio finished what would be considered a remarkable round of funding even during the best of times. His underwriter, Goldman Sachs, told him it was the first simultaneous “quad” it had seen: releasing a private placement memorandum and at the same time announcing three different kinds of public capital. And, as icing on the cake of the $2.23 billion initially announced, an oversubscription in each tranche triggered what Wall Street calls a “greenshoe” event, allowing additional shares to be sold, bringing the total above $2.4 billion.

What should have been an unqualified grand slam was temporarily dampened when some investors and media noticed two sentences in a 59-page public filing on Tuesday which seemed to disclose “substantial doubt” about the company’s ability to continue “as a going concern,” and another warning that, should investment not be forthcoming, “it may be necessary for us to reorganize our company in its entirety, including through bankruptcy proceedings.”

The language, Del Rio said, was a “mandatory, technical accounting reporting requirement that our auditor, Price Waterhouse, was required to issue in conjunction with the offering memorandum.” Though the details the following day about the success of the offering would render the point moot, NCL stock dropped 22% the day before the full scope of the investments were announced.

The $2.4 billion, combined with $1.1 billion in cash the company already had, “probably gives us the biggest liquidity cushion -- the longest runway -- of any company in the cruise space,” Del Rio said. “I challenge you to find another company in any industry that can say that they can withstand a 100% cessation of operations with zero revenue for more than 18 months.”

When this is all over, Del Rio asserts, “Norwegian will be one of the survivors, one of the success stories. This was truly a team effort. Yesterday I addressed them all, and it was a very emotional moment because what was being saved was a great institution. We invented the cruise industry more than 50 years ago and I would be damned if, under my watch, that was going to change.”

NCLH Successfully Secures More Than $2 Billion of Additional Liquidity

Norwegian Escape

Norwegian Cruise Line Holdings Ltd. (NCLH) has successfully secured over $2 billion of additional liquidity so it is “well-positioned” to weather the suspension of operations during the Covid-19 pandemic.

On May 5, the company announced the launch of a series of capital markets transactions, led by Goldman Sachs, to raise approximately $2 billion. The transaction has since been upsized to gross proceeds of $2.225 billion.

The transactions consisted of a $400 million public offering of common equity, $750 million exchangeable senior notes offering, $675 million senior secured notes offering and a $400 million private investment from global consumer-focused private equity firm L Catterton.

Contingent on completion of the transactions, the company said on May 6 that it expects to have approximately $3.5 billion of liquidity. The move came a day after NCLH said there were doubts about its ability as "a going concern."

“This significantly strengthens the company’s financial position and liquidity runway and it now expects to be positioned to withstand well over 12 months of voyage suspensions in a potential downside scenario,” the company said in a news release. “When the transactions are completed, the additional liquidity alleviates management’s concern about the company’s ability to continue as a going concern for the next 12 months.”

A financial analyst report by Wedbush concurs. “What seems to be getting missed is that the company now has the cash in place to survive until mid-to-late-2021 even under a worst-case net cash outflow scenario,” the report said. “While we have been relatively bearish with respect to our assumptions as to when the industry is likely to open back up, much less go back to ‘normal’, the liquidity recently added by NCLH would seem to put the company in a sound position under the majority of plausible scenarios, no small feat given the gauntlet that they needed to run through in recent months to ensure the company’s survival.”