Norwegian Cruise Line Flags ‘Going Concern’ Over Ability to Stay Afloat

Posted on 6 May, 2020 by Spacejunkie2

Norwegian Jade photo credit Dave Jones

Norwegian Cruise Line Holdings Ltd., the world’s third-largest cruise operator, raised doubts about its ability to keep running as a business on Tuesday, the first in the sector to signal it may succumb to the coronavirus crisis.

The company’s shares slumped about 20% as it also launched a $1.6 billion offering of shares and bonds in a scramble to raise money, and announced a $400 million investment in a subsidiary from a private equity firm.

Norwegian Cruise and rivals Carnival Corp and Royal Caribbean Cruises have been among the most high-profile victims of the pandemic after deadly outbreaks on some cruise ships led to extended port quarantines in Japan and California.

Norwegian, which has suspended its sailings through June 30, has not yet announced a relaunch date. On Monday Carnival said it plans to resume some cruises beginning Aug. 1, pending continued efforts to coordinate with government officials.

The cruise industry was left out of a $2.3 trillion U.S. stimulus package for troubled companies as the major players are all incorporated outside the United States.

“COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which adversely affects our ability to obtain acceptable financing,” Norwegian said, also flagging substantial doubt about its ability to continue as a “going concern.”

The company said that as of April 24, advanced bookings for the remainder of the year were “meaningfully lower than the prior year, with pricing down mid-single digits.” Norwegian’s shares have lost almost 80% of their market value this year.

The Miami-headquartered company faces class-action lawsuits alleging that it made false and misleading statements to the market and customers about COVID-19 and its impact on its business – allegations it says are without merit.

In March, the Florida Attorney General announced an investigation related to Norwegian’s marketing to customers during the coronavirus outbreak, based on allegations it downplayed the severity and highly contagious nature of the virus in an effort to sell cruises.

Other attorneys general and governmental agencies are conducting similar investigations, according to the company.

Norwegian said it does not have sufficient liquidity to meet its obligations over the next 12 months.

Since the start of the crisis, the company has borrowed $1.55 billion under credit facilities. At the end of last year, it had about $6 billion of total long-term debt obligations and cash and cash equivalents of $252.9 million.

A subsidiary of Norwegian Cruise got a $400 million investment from consumer-focused private equity firm L Catterton on Tuesday. It had been in talks with several private equity firms.

Shares of Carnival were down 4.3% and shares of Royal Caribbean were down 5.6% on Tuesday. (Reporting by Helen Coster in New York and Ankur Banerjee and Nivedita Balu in Bengaluru; Editing by Saumyadeb Chakrabarty, Sweta Singh and Tom Brown)

Norwegian Cruise Line Withdraws Forecast

Posted on 28 April, 2020 by Spacejunkie2

Norwegian Bliss in Ponta Delgada photo credit Dave Jones

Norwegian Cruise Line Holdings Ltd on Monday warned of a quarterly loss and withdrew its 2020 forecast, as the cruise operator struggles with the suspension of all voyages through the end of June due to the coronavirus crisis.

The pandemic has halted international travel and effectively shut down the cruise ship and airline industries, with companies, now bleeding cash and scrambling for new funds to ride out the slowdown that could last longer than expected.

Shares of Norwegian Cruise and rivals Carnival Corp and Royal Caribbean Cruises have taken a hit in the past few months as ships remain docked at ports and people wary of taking trips in the future.

The cruise liners are also not eligible to receive funding under the coronavirus stimulus bill since they were not incorporated in the United States, adding to further woes for the companies.

Norwegian Jade Photo was taken from a tender credit Dave Jones

Norwegian Cruise withdrew its forecast for the first quarter and the rest of the year but said it expects to report a loss for those periods. Royal Caribbean has also withdrawn its forecast, while Carnival, which operated two of the virus-stricken cruises, has predicted an annual loss.

Shares of the Miami-based Norwegian Cruise rose about 9%, while those of Royal Caribbean and Carnival were up about 8%. The stocks have lost about three-quarters of their value so far this year.

Norwegian Cruise said it would cut $515 million in spending to boost its cash reserves and estimated cash burn of about $110 million to $150 million per month as suspension of its three brands continue.

The company, which had about $1.4 billion in cash and cash equivalents at the end of March, said on Monday it had $1.8 billion of ticket sales as of March 31, that includes cancellations of about $850 million through June 30.

Despite growing cancellations, Chief Executive Officer Frank Del Rio, was optimistic about future demand, echoing Carnival’s CEO Arnold Donald who has predicted strong 2021 bookings.

“We believe the disruption to the travel industry, while swift and severe, will eventually subside,” Del Rio said.

Norwegian Cruise said booking trends indicate demand for cruise vacations for 2021 is essentially flat, although at lower prices.

Norwegian Cruise Line Holdings brands extend the suspension of sailings

Posted on 24 April, 2020 by Spacejunkie2

Norwegian Sky leaving the Port of Miami, photo credit Dave Jones

Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises have extended the suspension of all cruises until June 30.

The Norwegian Cruise Line Holdings brands extended the current extension from May 11 as they bid to help stem the spread of Covid-19.

The company said it will continue to work with the US Centers for Disease Control and Prevention (CDC), the federal government and global public health authorities to take “all necessary precautions” to ensure the health, safety and security of guests, crew and the communities it visits.

“We are committed to taking all appropriate actions to combat the spread of Covid-19 and, as such, have extended our global voyage suspension through June 30,” said Frank Del Rio, president and chief executive of Norwegian Cruise Line Holdings. “We continue to work closely and in partnership with the US CDC, global public health authorities and local, state and federal governments to build upon our already rigorous health and safety protocols to ensure that our brands are ready to safely resume operations with these new protocols in place.

“Our teams are working around the clock to do what is right by our loyal guests and valued travel partners and we greatly appreciate their understanding as we continue to adapt to the ever-evolving global health environment.”

Guests who are booked on voyages with embarkation dates between May 11 and June 30, 2020, on Norwegian Cruise Line, Oceania Cruises or Regent Seven Seas Cruises are asked to contact their travel agent or the cruise line for more information.