Norwegian Cruise Line reports $1.9bn loss

Posted on 15 May, 2020 by Spacejunkie2

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

Posted on 14 May, 2020 by Spacejunkie2

P&O Cruises Announces Huge New Ship Coming in 2022!

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

Posted on 14 May, 2020 by Spacejunkie2

Fleet guide - Royal Caribbean Discussion - Royal Caribbean Blog
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.