Royal Caribbean outgoing CEO Richard Fain announced on Wednesday on CNBC that the company is looking at strong summer 2022 bookings. Fain also announced that Royal Caribbean already has a plan on how to use the cash flow. For one, Royal Caribbean is looking to take advantage of the strong summer 2022 bookings to pay its debt during the pandemic. Plus, the cruise line is looking to reinvest.
During its third-quarter report, Royal Caribbean has $19.9 billion in long-term debt. The company’s debt increased by 10% in 2021.
Fain said that “(The cruise business) has always been a cash flow business. It’s a highly capital intensive business, but once you have the ships, they become cash cows”.
Fain is scheduled to step down as CEO of Royal Caribbean by January 3 after serving for more than three decades. Fain played a role not only in the resumption of Royal Caribbean’s operation but also in the entire cruise industry.
But even if Fain is leaving his position as CEO, he is confident that Royal Caribbean’s chief financial officer, Jason Liberty will fill in as CEO well.
Strong Summer 2022 and Higher Prices Than 2019
Last month, the company did not meet its expected revenue hitting $457 million in profit for the third quarter. On the bright side, volumes improved despite this summer’s delta variant surge.
According to Fain, “That will generate the cash flow that we need to pay down the debt, to reinvest in our technology, reinvest in our sustainability efforts, reinvest in our new ships”. Even with challenges, Fain claims that “it looks like we’re well on the way towards getting back to the way we were before (COVID) and even better”.
Aside from the US market, Royal Caribbean also expects business from Europe. Fain said that “The US is the dominant market, but the international markets are growing even faster”. He added that “One of the things we’ve been very successful at is attracting Europeans to come on our ships in the Caribbean and attracting Americans to go on our ships in the Mediterranean”.
For Fain, the industry is starting a “new growth phase”. Fain added that “As borders begin to open up, as we begin to live life again, all that works in our favor”.
