Cruise Lines, Facing Record Losses, Extend Suspension Of Sailing Until September

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Sergei Klebnikov   Forbes U.S. Staff

Norwegian Cruise Line

Photo: Alonso Reyes/Unsplash

While cruise stocks have recently been rebounding amid optimism about reopening the economy, the industry remains paralyzed by the coronavirus pandemic for the foreseeable future, with major cruise operators facing big quarterly losses and on Friday announcing that they’re extending their suspension of sailing.


- Major cruise lines like Carnival, Norwegian Cruise Line and Royal Caribbean Cruises have voluntarily extended their suspension of voyages out of U.S. ports from July 24 until September 15, the Cruise Lines International Association announced on Friday.

- Amid the shutdowns caused by the coronavirus pandemic, shares in the three major cruise operators have plunged between 55% and 70% so far this year.

- Carnival, the world’s largest cruise operator, on Wednesday reported a record loss of $4.4 billion in the second quarter. Revenue fell 85% to $700 million from the same period a year earlier.

- The cruise operator said that it expects to burn through about $650 million per month during the second half of 2020, but Carnival had $7.6 billion of liquidity as of May 31, which leaves it enough cash to survive into next year without resuming sailing.

- The dismal financial results are yet another example of how badly the coronavirus pandemic has impacted the cruise industry, with fleets of all the major cruise operators under a no-sail order from the Centers for Disease Control and Prevention since mid-March.

- Cruise stocks all plunged on Wednesday, for instance, after Norwegian Cruise Line first extended its suspension of voyages by two months, cancelling all departures until at least October 1. 

- But all the big cruise companies remain hopeful that customers will return in droves once lockdowns are lifted: Carnival, Royal Caribbean and Norwegian have all said that demand and forward bookings for cruises in 2021 remains strong.


“Although we had hoped that cruise activity could resume as soon as possible after that date [July 24], it is increasingly clear that more time will be needed to resolve barriers to resumption in the United States,” according to the CLIA’s press release.


Many cruise operators are concerned about customers asking for refunds on cancelled voyages, instead of taking credits for future trips. With cruises having been suspended for months, big operators are now in survival mode, raising liquidity to cover their cash burns. According to Carnival, “approximately half of guests affected have requested cash refunds” as of May 31.


Over the last month, cruise stocks have rebounded strongly amid optimism on Wall Street over a reopening of the economy and faster than expected recovery. Carnival shares are up 28%, Royal Caribbean 36% and Norwegian 50%. But over the past week, cruise stocks have been hard-hit again, falling around 10% as investors grow increasingly concerned about a resurgence in coronavirus infections across the country. Some U.S. states reopening have recently reported record numbers of new cases, including Arizona, Texas, Florida and California. 



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Sergei Klebnikov   Forbes U.S. Staff

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History.