‘Beyond frustrating’: $1.3 billion Q3 loss for Royal Caribbean as cruises remain canceled
Royal Caribbean Group reported its third 10-digit loss of the year Thursday as cruises in the U.S. — its biggest market — remain canceled.
In the third quarter of 2020, the second largest cruise company in the world reported a net loss of $1.3 billion or $6.29 per share, compared to a net income of $883.2 million or $4.20 per share in the same time frame last year. Cruises on the company’s four brands — Royal Caribbean International, Celebrity Cruises, Azamara and Silversea — have been canceled since mid-March when the industry shut down amid COVID-19 outbreaks on several ships.
As COVID-19 cases surge in the U.S., CEO Richard Fain said he remains optimistic that the industry and the U.S. Centers for Disease Control and Prevention can create a pathway to safely restart cruises.
“Through our continued dialogue we are moving in the direction of a healthy return to service,” he said.
The CDC’s no-sail order — shortened by the White House from a planned extension to February 2021 — is set to expire on Saturday. Without an extension, cruises will be allowed to resume in the U.S. on Nov. 1, though Royal Caribbean Group and all other major companies have canceled cruises until at least Dec. 1.
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Looming over the CDC’s decision on cruising is the 2020 presidential campaign, which is nearing a close. Florida, home to headquarters for Carnival Corp., Royal Caribbean Group, Norwegian Cruise Line Holdings, and MSC Cruises USA, is still in play for President Donald Trump and Democratic presidential nominee, former Vice President Joe Biden.
Fain and other cruise CEOs joined a call with Vice President Mike Pence on Oct. 9 to discuss their efforts to get back to business.
“I’m quite pleased that we’re working cooperatively with the experts and it is my strong hope that this is going to be decided on the basis of the science not on the politics,” said Fain. “If we can restart one important element of our economy in a safe and healthy way I think that’s in everyone’s interest.”
COVID-19 cases and hospitalizations in the U.S. are surging, a development Fain called “beyond frustrating.” Social gathering restrictions in Germany this week caused Carnival Corporation’s AIDA Cruises to cancel cruises there in November. Fain said TUI Cruises, a Germany line partially owned by Royal Caribbean, will continue to operate. On Thursday, Canada banned cruise ships through February 28, 2021.
The cruise industry has committed to testing passengers before boarding when cruises restart but has so far not specified what tests companies will use for U.S. passengers, or when and how passengers will be tested. Fain said it is too early to tell.
“I won’t get into the specifics because if I do, I think I’ll be wrong tomorrow,” he said.
The company said that bookings for the first half of 2021 are what it had anticipated given its plan to restart cruises on just a few ships at first; bookings for the second half of 2021 are “within historical ranges.” Royal Caribbean International CEO Michael Bayley said that customer bookings are closely linked to feelings about COVID-19.
Singapore has given the company the green light to operate cruises in December, Fain said; Royal Caribbean International is readying its 4,900-passenger Quantum of the Seas ship. With most of the company’s ships laid up, the company said it has a cash-burn rate of $250 million to $290 million per month. As of Sept. 30, 2020, the company reported it had liquidity of approximately $3.7 billion.
