Carnival Corp. “Encouraged” that US Cruising Will Resume in 2020

Carnival Corp. & plc is “encouraged” that cruising may resume in the U.S. this year after the Centers for Disease Control’s (CDC) no-sail order was extended by only one month to Oct. 31, 2020.

“For many months, cruise lines have worked with experts worldwide to develop unprecedented public health protocols and are hopeful these measures will lead to a gradual, phased resumption of cruising by the end of the year,” Carnival Corp. said in an Oct. 8 quarterly business update. “There is constant dialogue ongoing in the United States for a potential cruise restart and the company is hopeful that the industry is in a position to collaborate with the CDC and administration to resume cruising from the United States this year.”

The business update outlined the corporation’s efforts to weather the coronavirus pandemic well into 2021, citing the disposal of 18 cruise ships, bolstering liquidity by $12.5 billion since May 31, and delaying delivery of some new ships. At the end of the third quarter, the company had $8 billion of available cash and cash equivalents, CFO David Bernstein said.

“We have come full circle from initiating a suspension in the early days of the pandemic, to transitioning the fleet into a pause status, right-sizing our organization and, now, embarking on the phased resumption of guest operations, underway in two of our world-leading cruise brands, Costa in Italy and AIDA in Germany,” Carnival Corp. President and CEO Arnold Donald said in a press release. “We have accelerated the sale of less-efficient ships, enabling us to capitalize on pent-up demand on reduced capacity and structurally lower our cost base, while retaining our most cash-generating assets. We are taking aggressive actions managing the balance sheet and reducing capacity to position us to weather this disruption and also emerge a leaner, more efficient company, reinforcing our industry-leading position.”

In the face of the global impact of COVID-19, the company paused its guest cruise operations in mid-March. The company resumed limited guest operations last month, with Costa Cruises’ successful voyages on the Costa Deliziosa and Costa Diadema. Sailings on AIDA Cruises are anticipated to begin next week.

The initial cruises will continue to operate with reduced passenger capacity and enhanced health protocols developed with government and health authorities.

Total customer deposits balance on Aug. 31 was $2.4 billion, the majority of which were FCCs, compared to $2.9 billion on May 31. Approximately 60 percent of bookings taken during the three weeks ending Sept. 20 were new bookings as opposed to FCC re-bookings, despite minimal advertising or marketing.

The company’s monthly average cash burn rate for the third quarter 2020 was $770 million, but the company expects the monthly average cash burn rate for the fourth quarter of 2020 to be approximately $530 million.