Carnival Corporation Downgraded to Junk Status

A person stretches at a park overlooking the Pacific Ocean and Carnival Panorama cruise ship as authorities encourage social distancing to prevent the spread of coronavirus disease (COVID-19) in Long Beach, California Sunday, March 29, 2020. REUTERS/Patrick T. Fallon

Rating agency Standard & Poor’s on Tuesday downgraded bonds of Carnival Corp to junk status, forecasting continued weak demand for the cruise industry hammered by the COVID-19 pandemic.

Standard & Poor’s cut its rating on the world’s biggest cruise operator’s secured bonds to ‘BB+’ from ‘BBB-‘, and its unsecured bonds to ‘BB-‘ from ‘BBB-‘. Both are now regarded as non-investment grade or junk bonds.

Carnival’s overall issuer credit rating was also lowered to ‘BB-‘ from ‘BBB-‘. Last month, Moody’s Investors Service also cut the company’s rating to junk status.

Earlier in June, Carnival reported a record $4.4 billion in preliminary quarterly losses after its business was crippled by the health crisis, forcing it to take major write-downs on the disposal of some docked ships.

The company, which in recent weeks fully drew down a $3 billion credit line and issued $6.6 billion in bonds and equity, has also been looking for further waivers on debt repayments due next year, without which it could breach some loan conditions.

“We forecast that the company’s credit measures will remain very weak through 2021 and anticipate that its adjusted leverage may potentially exceed 10x in 2021 following a significant deterioration in its performance in 2020,” S&P said in a statement.

S&P has a “BB” issuer credit rating, also a junk status, on Carnival rival Royal Caribbean Corp. (Reporting by Uday Sampath in Bengaluru; Editing by Shinjini Ganguli)

(c) Copyright Thomson Reuters 2020.

Larger cruise ships on local deployments expected to be first to return

Deck Plans | Azamara

Larger cruise ships with local deployments will be the first to come back on sale following Covid-19, the former boss of Azamara has predicted.

Larry Pimentel, who stepped aside from his role as president and chief executive in April as the line made plans to survive the pandemic, said he expected older, smaller ships with international deployments to “sit on the sidelines simply because of the air travel” as travel resumes.

Speaking on a Travel Weekly webcast, he said: “Think about taking a 10, 12 or 15-hour flight in coach and the denseness that you’d find on these carriers. I’m not going to do that at the moment.

Click on the image to watch the Chat.

Webcast: 'It's a matter of choice, we have to choose to persist ...

“We’re going to find big ships with local deployments are the first to come back,” Pimentel said. “You’re probably going to find short rotations out of the States and you’ll probably get three or four-day rotations going to private islands. Why? Private islands can secure the safety and health in all areas without a bunch of nonsensical politics layered in it, which makes things even more complex and, frankly, angers a lot of people.”

Pimentel said small luxury vessels sailing to less crowded destinations may also come back sooner, but said: “We still have an issue with social distancing in an industry that was all about the connection on the ships, so herein lies a paradoxical sort of scenario.”

Pimentel predicted many ships would not come back into the sector at as line battle with cash flow issues.

“Cruise lines need the cash right now,” he said, noting that the only income lines are bringing in is onboard revenue as cabins on 2021 sailings will be filled up with people who deferred from this year and used their future cruise credits to rebook. “So the cruise industry is going to have a terrible 2020, and a terrible economic 2021.”

Pimentel said: “The ships that come back are likely to fill up as there won’t be as many ships operating. Let’s face it, there will be some ships that will sit in the sidelines that won’t come back to the industry. The whole industry closed down in about three weeks. There is no way in hell we’re coming back in three weeks or even three months.”

He also predicted that “new cruise ship orders will slow so significantly that it will almost seem like they are stopping altogether, compared to we’ve seen over the last couple of years”.

“I fully expect a lot of options not to be secured,” he said. “This [recovery from the pandemic] is not months, this is a multi-year process.”

He pointed out that there are 19 new ocean ships on order this year, adding: “That’s a lot of vessels and right now, who needs more capacity? Nobody. But in the future, demand will be there. I’ve learned this about the consumer – once they feel even a little bit comfortable, and the value seems there, they will book.”

CMV Suspends Cruises Through August 25

CMV Magellan

Cruise & Maritime Voyages (CMV) has announced the further the suspension of all worldwide cruises from July 1 to August 25, 2020, citing the continued global pandemic outbreak of the Covid-19 coronavirus, government advisories still in force and the lockdown of many countries and ports around the world.

There were no reported cases of Covid-19 coronavirus on any of CMV’s small to medium-sized ships, according to the company.

CMV continue at present to employ shipboard officers and crew members throughout this suspension period and they are looking forward to welcoming back on board all their passengers just as soon as this pandemic is over, the company said, in a press release.

All affected adult fare-paying passengers are being offered an attractive future cruise credit of 125% of the amount paid for the cruising holiday valid until March 31 2021.

For families booked on one of the affected summer holidays three multi-generation sailings a 50% discount will be applied to the 2021 or 2022 teenage and children fares (under 16 years) for booking transfers and to help facilitate affected passengers wishing to transfer their bookings, the 2021 Buy One Get One Free early booking offer has been extended to July 31.

Welcome Vasco Da Gama | Cruise & Maritime Voyages

CEO Christian Verhounig said: “Due to the continued global pandemic, we are still unable to perform our scheduled itineraries and to deliver the travel experience normally enjoyed by our valued passengers. We have therefore taken the decision to temporarily further suspend all cruises until 25th August 2020, when we very much hope to be able to resume service. We are extremely proud to see that 70% of our passengers affected by the cancellation of their cruise have either re-booked and transferred onto a future 2021 cruises or require more time with the peace of mind of a refund credit note. Many passengers are also waiting until the release of our 2022 cruise program later this year. This is a great sign and we know that passengers are looking forward to travelling with us in the near future.”