On Thursday April 9th, The Centers for Disease Control and Prevention (CDC) announced an extension of a No Sail Order for all cruise ships for 100 days. This means Ships won't sail til at least mid-July.
The highly leveraged cruise lines are attempting to retaining the funds already paid to them for Spring and Summer bookings and encouraging guests to accept 125% credits toward a future cruise and/or large amounts of on-board credit to rebook a future date.
Even those booking new cruises are getting great deals. For example, I checked today on a Cruise to Mexico and the cruise, taxes, fees and gratuities add up to less than the onboard credit Carnival offered, meaning I would make $6.78 on taking the cruise.
All 3 cruise lines have taken steps to slow spending, but cash flow is still needed.
As the cruise lines are not registered in the US, they may not be eligible for US Government loans and assistance from the Stimulus. Carnival is incorporated in Panama, Norwegian is incorporated in Bermuda, and Royal Caribbean is incorporated in Liberia.
Royal Caribbean has recently accessed approx $3.5 billion from existing credit lines.
Carnival has shown that at the right price, the cruise industry can find the money it needs amid turmoil caused by the coronavirus (COVID-19) panic. Carnival initiated an effort to raise over $6 billion to shore up liquidity. Approx $4 billion was raised by selling its debt by way of secured bonds (secured by a first-priority claim on the company’s assets). The three-year bonds have a yield of just under 12%. Information released during the bond offering: Carnival has received 39,000 bookings since it stopped sailing, and 45% of customers whose cruises had to be canceled/rescheduled chose credit for future trips as opposed to cash refunds.
On 4/6/20, a filing with the Securities and Exchange Commission shows that Saudi Arabia’s Public Investment Fund (PIF) now owns an 8.2% stake in Carnival. Saudi Arabia’ PIF held no stock in the cruise line at the start of 2020.
The same day, Carnival director Randall Weisenburger paid $10 million for a large block of shares at $8 a share. He now owns 1.38 million Carnival shares, he had last bought Carnival stock on July 3, 2019, when he paid $930,000 for 20,000 shares, a per-share average price of $46.50.
Swiss bank USB report issued March 31, found that 9% more cruises have been booked for 2021 than were being booked the same time last year. This does include people using credits for canceled cruises, but the increase still shows many have the desire to book a cruise and the industry will bounce back when restrictions are lifted. How soon will you plan your next cruise?
Carnival Cruise Line
Customer service: 1 (800) 764-7419Reservations: 1 (800) 327-9501
Headquarters: Miami, FL
Norwegian Cruise Line
Customer service: 1 (866) 234-7350Reservations: 1 (866) 234-0292
Headquarters: Miami, FL
Royal Caribbean International
Customer service: 1 (800) 256-6649Reservations: 1 (866) 562-7625
Headquarters: Miami, FL
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