Royal Caribbean Cruises Ltd posts $1.4bn Q1 loss

Posted on 20 May, 2020 by Spacejunkie2

Royal Caribbean Cruises Ltd has reported a net loss of US$1.4 billion for the first quarter of 2020.

The parent company of Royal Caribbean International, Celebrity Cruises, Azamara and Silversea paused all operations amid the global Covid-19 pandemic on March 13.

In a trading update today, the company said the pandemic was expected to have hit production at shipyards, meaning delays to new-build Royal ships.

RCCL said the pandemic had led to the cancellation of 130 sailings, which equated to a 20% reduction on its planned sailings and was 17% down on last year’s programme.

The company posted a profit of $249.7 million in the first quarter of 2019 and said it expects to report an overall net loss in 2020.

RCCL withdrew its full-year trading guidance in March, and the update noted: “The magnitude, duration and speed of Covid-19 remain uncertain. As a consequence, the company cannot estimate the impact of Covid-19 on its business, financial condition or near or longer-term financial or operational results with reasonable certainty.”

It expects non-operating expenses of between $590 million and $610 million for the remainder of the year.

Bookings for the remainder of 2020 are “meaningfully lower” than 2019 with lower prices, RCCL reported but noted that before the pandemic took hold it was in “a strong booked position and at higher prices” than 2019.

Looking ahead, it said “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”. The company stressed it was “still early in the booking cycle”.

RCCL brands had offered customers booked on cancelled cruises either a cash refund or future cruise credit note and said that, as of April 30, 2020, approximately 45% of guests had requested cash refunds.

As of March 31, 2020, the company had $2.4 billion of cash in customer deposits.

RCCL estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month while operations are suspended but noted it had “taken significant actions to enhance its liquidity, preserve cash and secure additional financing”. These included securing a $4 billion increase in financing and knocking $3 billion off its 2020 capital expenditure.

“We have taken swift and substantial actions to bolster our financial position by significantly reducing our operating and capital spend and leveraging our strong balance sheet to raise additional capital,” said Jason Liberty, executive vice president and chief financial officer.

As of April 30, 2020, the company had liquidity of approximately $2.3 billion all in the form of cash and cash equivalents, RCCL reported. And on May 19, 2020, it completed a $3.3 billion senior secured notes offering, improving its liquidity position by approximately $1 billion.

RCCL noted that as of May 19, 2020, the expected debt maturities for the remainder of 2020 and 2021, are $0.4 billion and $0.9 billion, respectively.

“Responding to the dramatic change in business conditions caused by COVID-19 has required focus, dedication, ingenuity and improvisation from all our people, and their efforts have been nonstop,” said chairman and chief executive Richard Fain. “We understand that when our ships return to service, they will be sailing in a changing world. How well we anticipate and solve for this new environment will play a critical role in keeping our guests and crew safe and healthy, as well as position our business and that of our travel agent partners to return to growth.”

RCCL is due to complete its repatriation of crew members to their home countries, and said the company’s future focus now turns to four key principles:

Ensuring the safety of guests and crew
Proactively enhancing liquidity
Protecting the Company’s brands, and
Defining and preparing for a “new normal.”

Port Everglades Expansion On Track

Posted on 17 May, 2020 by Spacejunkie2

Port Everglades is advancing $1.6 billion in infrastructure improvements that are underway and expected to be completed in the next five years, according to a press release.

“The COVID-19 pandemic is certainly impacting this year’s bottom line, but we are fortunate that Port Everglades’ diversified business sectors of cargo, cruise and petroleum can address a dip in one business sector and be balanced out with stability in other revenue-generating business sectors. As a result, Port Everglades has a history of financial success and has budgeted for several sizeable construction projects that are moving forward at a rapid pace with little disruption from the virus,” said Port Everglades’ Glenn Wiltshire, Acting Chief Executive & Port Director.

The U.S. Army Corps of Engineers is in the preconstruction engineering and design phase of deepening the Port’s navigation channels from 42 feet to 48-50 feet and widening narrower sections of the channel for safe vessel passage.

In February 2020, this project received $29.1 million in funding under the U.S. Army Corps of Engineers FY 2020 Work Plan. The funding will be used to build a new facility at U.S. Coast Guard Station Fort Lauderdale so the Intracoastal Waterway can be widened by 250 feet. Currently, this chokepoint in the channel puts operating restriction on large Neo-Panamax cargo ships, which affects their ability to transit past docked cruise ships. The Coast Guard Station reconfiguration is the first phase of the larger dredging project.

Port Everglades is also building a new parking garage to serve Cruise Terminals 2 and 4. The new 1,818-space garage is currently under construction, with a Fall 2020 completion date. It will feature an air-conditioned bridge with moving walkways to deliver guests to Terminal 2, Princess Cruises’ prototype Ocean Medallion terminal. The Northport Garage, where passengers now park, will be dedicated to the Greater Fort Lauderdale Broward County Convention Center.

One Ocean Expeditions Details Challenges in Court Filing

Posted on 17 May, 2020 by Spacejunkie2

Andrew Prossin, managing director of One Ocean Expeditions (OOE), has detailed the company’s challenges in a recent affidavit filing for the company’s bankruptcy with the Supreme Court of British Columbia.

Highlights:

Each year, prior to the company’s difficulties it ran about 70 voyages.
“We were considered one of the largest private Canadian vessel companies and had anticipated gross revenues in 2020 to exceed $75 million,” Prossin said.
Prior to the company’s financial difficulties, OOE had 30 to 40 full-time land-based employees, 15 to 20 land-based contractors, 300 full-time field contractors and 200 full-time independent crew contractors.
Difficulties started in August 2018, according to the filing, with the grounding of the Akademik loffee (Al), which was on a charter deal with PP Shirshov Institute of Oceanology and its related company Terragelida Ship Management Limited.
The PP Shirshov Charter was originally entered into in 2012 and granted One Ocean the option to renew each year indefinitely. The PP Shirshov Charter had been renewed most recently on June 1, 2018.
One Ocean paid a flat rate for the vessels for a minimum of 195 revenue days per year.
The grounding of the Akademik loffee led to nine cancelled voyages that were mostly sold out, according to the filing.
One Ocean suffered costs and liabilities associated with the grounding of the ship, repairs, and subsequent delay in excess ofS$6.5 million, which primarily represents lost revenue from cancelled trips, but includes other costs associated with last-minute cancellations and handling of passengers, the company said.
Following the running aground, from September 2018 to April 2019, One Ocean entered into negotiations with PP Shirshov to settle its claim for losses due to the grounding. Under the PP Shirshov Charter, according to One Ocean, the PP Shirshov was liable for the losses associated with the nine voyage cancellations and the repairs of Al. However, PP Shirshov contested its liability, Processing said.
In April 2019, after eight months of discussions, the PP Shirshov withdrew from all negotiations regarding the foregoing claim and purported to terminate the PP Shirshov Charter, according to the filing.
In May 2019, PP Shirshov repossessed both ships and sailed them back to Russia. The repossession was said to have happened suddenly and without notice to One Ocean.
At the time of the repossession, there was approximately $400,000 in prepaid charter hire on one vessel and $200,000 in prepaid charter hire on the other, in addition to other One Ocean assets aboard the vessels such as food and drink inventory.
One Ocean was forced to cancel all remaining scheduled voyages on the Russian ships, which resulted in costs and liabilities of approximately $12.5 million, which primarily represents lost revenue from cancelled trips, but also includes other costs associated with last-minute cancellations and handling of passengers.
That, in turn, put an enormous financial strain on One Ocean, according to the affidavit. One Ocean’s sales revenues dropped from an excess of $1million a week to less than $100,000 a week.
In the summer of 2019, recognizing the financial difficulties resulting from these events, One Ocean sought operation financing from various sources, and by September 2019 had been negotiating long- term financing commitment to cover short term capital costs associated with replacing the lost vessels, as well as to provide long-term financial stability.
The financing deal fell through, and the company was forced to halt operations on the Resolute.
One Ocean was not able to make the scheduled charter payments owing to Bunnys Adventure, the shipowner, due October 1,2019, and November 1, 2019, and as a result, on or about November 9, 2019, Bunnys Adventure terminated the Bunnys Charter and repossessed the Resolute.
The company had chartered the Resolute in 2018 on a bareboat charter deal for three years with an option to renew for 10 more years.
One Ocean has also initiated arbitration proceedings against PP Shirshov, looking for damages of $6.5 million from the results of the grounding, and an additional $12.5 million for wrongful termination of the charter. The company also is asking for the charter deal to be reinstated.
The company said it still has goods aboard the Resolute with a book value of $1.5 million and goods aboard the Russian vessels with a book value of $1.5 million.