Carnival to Delay New Ship Introductions

Posted on 12 July, 2020 by Spacejunkie2

Costa Firenze Under Construction at Fincantieri

Carnival Corporation said it expects only five of nine new ships set for delivery in the fiscal year 2020 and 2021 to be delivered prior to the end of the fiscal year 2021.

Carnival said that due to shipyard delays and the COVID-19 pandemic, it expects later deliveries of ships originally expected for the fiscal year 2022 and 2023.

Arnold Donald, CEO, speaking on the company’s business update call earlier in the week, said they had negotiated 16 delayed deliveries. The company expects two to three new ships to be delivered on a yearly basis going forward.

The company did not elaborate on which ships would see delays and further commented there would not be cancellations.

“We are not in discussions about cancelling ships,” said Donald. “We are in discussions with the yard about timing and deliveries.”

Pre-COVID Carnival Corporation Anticipated Delivery Schedule/Orderbook:

Cruise Line	Ship	Cost1	Tonnage	Capacity	Yard	Sailing	Delivery
P&O Cruises	Iona	$950	183,900	5,200	Meyer	Europe	2020
Princess	Enchanted Princess	$760	141,000	3,660	Fincantieri	Eur/Carib	2020
Carnival	Mardi Gras	$950	183,900	5,200	Meyer Turku	Carib	2020
Costa Cruises	Firenze	$780	135,500	4,232	Fincantieri	China	2020
AIDA Cruises	AIDAcosma	$950	183,900	5,400	Meyer	Europe	2021
Holland America	Ryndam	$520	99,000	2,660	Fincantieri	TBA	2021
Seabourn	Venture	$225	23,000	264	Mariotti	World	2021
Princess	Discovery Princess	$760	141,000	3,660	Fincantieri	TBA	2021
Costa Cruises	Toscana	$950	183,900	5,224	Meyer Turku	TBA	2021
Seabourn	Unnamed	$225	23,000	264	Mariotti	World	2022
P&O Cruises	Unnamed	$950	183,900	5,200	Meyer	TBA	2022
Carnival	Unnamed	$950	183,900	5,200	Meyer Turku	TBA	2022
Cunard Line	Unnamed	$600	113,000	3,000	Fincantieri	World	2022
AIDA Cruises	Unnamed	$950	183,900	5,400	Meyer	TBA	2023
Princess	Unnamed	$1,000	175,000	4,300	Fincantieri	TBA	2023
Carnival China	Unnamed	$750	135,000	5,000	CSSC	China	2023
Carnival China	Unnamed	$750	135,000	5,000	CSSC	China	2024
Princess	Unnamed	$1,000	175,000	4,300	Fincantieri	TBA	2025

(1) In Millions (USD) | Costs May Be Estimated

lng : LNG Powered

exp : Expedition Vessel

red : China/Asia Market Dedicated Vessel

Carnival Corp to dispose of 13 ships

Posted on 10 July, 2020 by Spacejunkie2

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.

LNG-powered newbuild Costa Smeralda gets its funnel | seatrade ...
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.

Cruise lines are not resorting to rock-bottom pricing

Posted on 1 July, 2020 by Spacejunkie2

Cruise Lines 2019 Q4 Breakdown: By the Numbers - Cruise Industry ...

By Johanna Jainchill

Cruise lines and Wall Street analysts report that cruise pricing, for the most part, has not gotten to the low levels seen after the fallout of the 9/11 attacks and the 2008 recession.

To be sure, there are deals out there, and some executives have said that Covid-era prices have fallen across the board — but not to the rock-bottom levels seen in prior crises. Execs, analysts and industry watchers have said this is primarily because demand is expected to exceed capacity, at least at first, because lines are likely to relaunch only a few ships at a time at reduced capacity.

“We note that since cruise lines are taking so much capacity out of service and not pricing to fill what is in service, they could potentially eliminate some of the lowest-margin demand that they might normally turn to when filling a ship,” UBS Analyst Robin Farley said in a recent note.

In discussing the strong pricing for 2021, Brad Tolkin, co-CEO of World Travel Holdings, agreed that reduced capacity was a big factor. “There will be a lot less of ships to top off within the last 90 days,” he said. But he also said that future cruise credits (FCC) the cruise lines have been using for cancelled 2020 sailings play a role.

“The cruise lines know they have these supersized FCCs out there; most are at least 25% more than the value of the cruise,” Tolkin said. “They have to keep pricing up to absorb that somehow.”

On top of that, he said that people who have the FCCs are upgrading.

“The people that took these FCCs said, ‘I love cruising, and I’m getting on a cruise; I’m taking the FCC,'” he said. “If they spent $3,000 on a cruise before, now they have $3,500, $3,600 to spend. They’re spending it and buying up.”

Vicki Freed, Royal Caribbean said that another reason why lines are holding the line on pricing is that they know that they will have lower occupancy and they don’t want to compromise quality.

“We know that initially, we’re not sailing at 100% occupancy and we’ll have to have lower load factors I think all the cruise lines are planning that,” Freed said. “And we’re going to need to have more staff on board and still offer the quality people expect from Royal Caribbean. If suddenly we downgrade the product onboard people will say, ‘they’re not the same brand I thought they were ‘ So you do keep your price integrity up in order to fund what we need to fund.”

Freed also anticipated that people will pay more for experiences that include Royal Caribbean’s Perfect Day at CocoCay private island.

“It’s a safe, enclosed environment; it’s a private island, it’s got all the fun and thrill and chill that people want now,” she said. “I think itineraries with Perfect Day at CocoCay or our private island of Labadee will demand a better price.”

UBS’s Farley also said that, according to an executive from a privately-owned cruise line, he expects “only single-digit price declines” by keeping only the lowest-priced cabins empty.

“He believes that cruise lines will keep ships in various stages of warm and hot and cold layup so that they will be able to add ships into service without delay if there is demand,” Farley said. “A month of notice is more than enough time to staff a ship and start operations. Airlift is not that much of an issue since the cruise lines can charter flights from the Philippines and Indonesia, for example, when they are ready to bring the crew back to a ship.”