Carnival Expects to Burn $650 Million a Month While Cruise Operations Are Paused
The carnival expects to burn $ 650 million a month while cruising is suspended
Carnival Corp., the world's largest cruise company, said in a company announcement released to investors on Thursday that it would not be clear when it would start cruising again.
In the company's second quarter, which ended on May 31, the company reported a net loss of $ 4.4 billion or earnings of $ 6.07 per share, preliminary results show. It is accelerating plans to outsource six ships over the next 90 days that should have been sold in the coming years.
The estimated cash burn rate for the second half of 2020 is $ 650 million per month. Customer deposits of $ 2.9 billion were made on the last day of the quarter, including $ 475 million for cruises scheduled to depart in the second half of 2020. The available liquidity is $ 7.6 billion.
Whether cruises will take place later this year remains open. In particular, Thursday's guidance did not mention the date of August 1, which Carnival Cruise Line previously set as the date for which eight of its vessels would be brought back into service. (Carnival Corp. owns nine brands, one of which is Carnival Cruise Line.)
The company reported that it was "unable to definitively predict when it will return to normal operations", but that an initial resumption "after gradual collaboration with the government and health authorities will come with the restart of certain ships and brands." Over time to offer its guests a pleasant vacation experience. "
The lines have postponed their restart dates three, four or even five times since mid-March, when the cruise industry first paused. The announced restart of Carnival Cruise Line on August 1 may be technically feasible - since the CDC's current No Sail order is expiring - but even CEO Arnold Donald questioned this in an interview with The Telegraph on June 8.
Competitor line Norwegian Cruise Line has postponed its restart date to October this week. The carnival-owned brand AIDA ruled out cruising in North America in 2020 as a whole, while another company brand, Cunard, pushed the restart through late November. Some smaller river cruises in Europe and the United States - the latter are exempt from the CDC regulation due to their limited capacity - are about to restart.
In addition, the company is still working to repatriate 21,000 remaining crew members from its ships. This is a bureaucratic tangle that has become not only a headache but also a human rights frontier problem for the cruise industry, as The Guardian and the Miami Herald have reported. Carnival's publication said the crew's physical and mental health was ensured with "single occupancy cabin accommodations, many with windows or balconies" and "access to fresh air and other areas of the ship, movies and the internet, and available advice".
There is still no clarity on how exactly cruise ships like Carnival will prevent Covid-19 from spreading once the cruise resumes, although all major lines are expected to work in partnership with the CDC and other agencies. Carnival said in its filing that such protocols "could include areas such as medical care, screening, testing, mitigation and disinfection that deal with arrival and departure at cruise terminals, boarding and disembarkation, experience on board, and shore excursions."
Carnival stocks fell about 5 percent on Thursday.
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