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Regguy

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Everything posted by Regguy

  1. Math is math. We are rapidly approaching a point where it will be a significant possibility that there will be at least one infected person on board and where crew all will have been in proximity to infected people. Cruising is not sustainable right now. It is really just a matter of time. Until then, those who do not recognize the risk they present to others simply are not going to be convinced and it is very hard to shake people who think it is only a matter of their personal health into understanding that social distancing has little to do with the robust but everything to do with the weakest in the herd. There will be a self reckoning eventually. People will have to look hard in the mirror. Math is math. If you have elderly people you care about, do not let them go anywhere near anyone who has cruised in the last 14 days.
  2. Washington Post says they saw the email and spoke to whistleblower. Again, if untrue where is the NCL press release?
  3. So when every news entity from the Washington Post to the Business Times to Fox News called NCL to ask them about a fake email that exposes them to mass liability and literally threatens to hasten the end of the company as we know it, NCL declined to say “it is fake, if you print that it is libel” but instead said “no comment”? Come on. You’re living in a fantasy world. The email obviously exists. I wish it didn’t but it plainly does.
  4. Well, you'd need a message directed to markets, not cruisers, which is a very different message. But that you have a plan. That your credit facility is adequate, that you can reduce capacity in a way that will keep things moving orderly, and that you can come out of this despite reduced demand. Maybe it's just too much of a catch-22 right now. The more you try to assure investors the more you're going to spook customers and turn the faucet of new money completely off or worse create a run on the bank for those who have deposits into 2021. I don't know. You're probably right. The fact that they are not doing it suggest that they just don't have something good to say which the markets seem to be taking seriously.
  5. The markets are a few dollars from starting to view Chapter 11 as a significant possibility. NCLH's silence right now is deafening. They have to send someone to CNBC or something to try to calm this somehow or this is going to turn into a real problem. Maybe they are working on getting the administration to suggest that they would intervene if necessary. Short of that I would have to think the markets are going to continue to view silence as bad news -- that they have no choice but to be quiet because they have nothing good to say. It is not going to take long for customers to realize that their deposits at this point are merely short-term unsecured loans. People are not stupid. NCLH needs to get out in front of this.
  6. Are we disbelieving that they asked NCL for comment and that NCL refused to comment? This is the kind of story where you deny if untrue and demand retraction since it's so obviously libel. I'm going to go with "true" on whether this e-mail actually exists. Whether it's really some company wide practice, who knows.
  7. I wonder if this was just a rogue team leader or if this is coming from higher up. It is a really stupid email. If I were in house counsel at NCL this would be sending shock waves through my office. Having an email urging a sales associate to say that CV 19 can’t survive in the Caribbean? That’s a really bad document if someone gets sick.
  8. No, it isn’t good at all. None of this is good. I have been the guy saying I thought the stock going to zero and Chapter 11 seemed to be a significant possibility. I am the one that has been saying that trying to borrow from your customers by pretending these FCCs are something other than highly contingent interest free unsecured loans is unsustainable. But this is the first news that makes me think NCL will not go down without a fight and it is a decent reminder that despite their debts they are not without options and assets.
  9. According to this it is just a line. It says they have not actually drawn on it yet and that they have about 1.5b in credit now. This is good news for shareholders. What you want to know is that they have the means to get through this and come out on the other end. A scenario in which they have to essentially sell Epic at a big loss to a lender in order to make payroll and meet their obligations to customers is a crummy scenario. it is one that will require some good fortune and some time to get back to the profitability that they were forecasting when everything was rosy. But it is a scenario where they can stay as a going concern and come out the other end. Hopefully, it won't come to that. That they are being proactive and making bold decisions now to stave off potentially company ending scenarios is good news. If I were a shareholder the other thing that I would be looking at right now is whether they are willing to do the hard work of trying to repair some of the loyalty damage that they have done in the last 3 or 4 years. It has been so very easy. They were printing money. They were sailing full. There was no consequence to slashing and cutting and turning their backs on their best customers. They need to start making amends now and making sure those people are going to be there for them when they get through this. These are existential questions. It's going to take nerves of steel. But this is a very good sign that they are ready to take bold action. I don't know if it's enough to rally the stock for the rest of the week but they have bought some time. It's the first good news for investors in two weeks.
  10. You may never really get the chance to buy at that level. I would think that if it gets to $8 it is only temporarily passing through on the way to a lower number that has a very significant chance of Chapter 11 built in. If the buy sell decision really comes down to a prediction about chapter 11 or not chapter 11, the price at which you're going to have to make that decision is likely a number north of $8, because below that it's close to game over. An $8 share price would be forecasting an earning per share of what? About 50 cents? A quarter? Anything is possible but once the thing gets into the teens we're close to a point where you're just basically betting on a binary outcome. There is little chance that NCLH does not eventually trade at more than $15 in the next few years if it survives. So, that would become the question. This is not investment advice. Maybe it will hit a floor of $8 and everyone will clean up like crazy!
  11. Yep. The CDC just issued a no sail order for a ship just to test two asymptomatic crew and the President recently said that it would have been his preference to prevent the other Princess ship from docking. The chance of an infected person boarding any particular ship increases more and more every day. Exponentially. It feels like there is some delusion going on here at CC about where this is all headed but I guess that is understandable. We wouldn’t be here if we didn’t love cruising.
  12. My point was that cruises are dropping faster than the market. The trend I am talking about is the march toward zero and Chapter 7 or 11 which the markets are now signaling they view as perhaps not likely but possible. The kind words would be a suggestion that government shut downs would be accompanied by intervention. That would stabilize prices. Otherwise this looks like trouble. Airlines have the market perception they are too important to the economy to be allowed to fail even by this administration. Cruises do not have that market perception
  13. Cruise stocks so far falling more significantly than the broader market and considerably more than airlines. I guess the market probably anticipates federal government intervention for airlines but isn’t so sure about cruise lines. With Trump stating his personal preference with the Princess ship was to keep it undocked and the CDC issuing guidance we may be looking at affirmative hostility to the industry in Washington right now as a facilitator of the spread of the disease. Or at least that is what the markets seem to imagine. I think a few kind words from Washington may be necessary for the stock trend to improve at this point. I wouldn’t be surprised if U.S. port closures are on the table and if they are the hope for NCLH would have to be that the government signals some kind of bail out at the same time. (This is message board speculation not investment advice.)
  14. Wow. Fuel is cheap enough that they can sail not full but I still don’t see how they can overcome the impact of the CDC advising against cruise ships.
  15. I was thinking about this earlier. I am not sure this is true with respect to port fees and certain taxes. I think those are actually only earned by the entities upon certain events happening not upon sale of the voyage ticket. (Sales taxes are different.) So I am not sure the trust analogy actually works and I think there is some precedent with respect to big box travel booking suppliers who collect a “tax” charge but don’t remit until you stay. But it might be a consumer protection violation. What was the practice if you cancelled day before or no showed? Do they always refund these amounts in cash? Edit: Here is where it gets weird. You pay port charges and taxes but then cancel and never use your FCC or don’t use all of it. Seems unlikely NCL could keep them.
  16. State department makes it official. Much of the focus is on potential repatriation problems but this is going to really clobber demand. https://travel.state.gov/content/travel/en/international-travel/before-you-go/travelers-with-special-considerations/cruise-ship-passengers.html?fbclid=IwAR23mRlu4-382HLuSM8i0KWQBSaZ4heDniggmxR3kBR6e2EgWiKr6B0EseM
  17. That seems pretty extreme. Just because two crew members were also on the other ship they are holding them at sea and cancelling the next cruise? The unspoken thing here has to be that they are sick or displaying symptoms right? I mean they must have known for a week they were on that ship? If CDC is going to start holding ships every time it is discovered that one or two people onboard was proximate to infected people weeks before, cruise activity will cease within weeks. Something has to be missing from the report.
  18. Just a little more to those who may be interested, it looks as though the last significant trade of NCL bonds last Friday was sold at $86. They are 2024 maturity bonds with 3.625 percent coupons. So, yeah, a $14 premium on a 3.8 year to maturity bond with a coupon already over 3.5 percent. NCL is going to have difficulty borrowing cash if lenders can simply buy their debt at high rates instead.
  19. I just read that medium term United Airlines bonds were trading late last week around 6.3 percent yields. That’s with long term treasuries at 1 percent. Money is cheap right now but I cannot see banks too eager to lend to cruise lines at the moment short of some prospect of government intervention. I think that NCL has decided to borrow from its customers. We should know fairly quickly whether or not it is working.
  20. Here is what we do know. NCLH revised EPS by 75 cents just due to redeployment of the Asia cruises across the three brands (40 sailings total, 21 on NCL). So, that’s a forecasted earnings reduction of about $170m not taking into account any other COVID impacts. That’s earnings not even revenue. That is about 20 percent of forecasted 2020 earnings. Cruise ticket revenue comprises about $4b of the company’s total gross revenue of about $6b. So, yeah, we can’t know exactly how far off new ticket revenue is off but it doesn’t take much to crush cash. Even 10 percent is going to lead to some very austere expense side measures and we are probably well beyond 10 percent. Wall Street seemed to be guessing around another $330m in projected 2020 dropped earnings as of last Friday and we won’t know until we know, at the next earnings report in May. If just the Asia redeployment was a $170m event, as I said above it doesn’t take a weatherman to know which way the wind blows. $4.1b in ticket revenue means over $10m per day in cash is what they are used to. (You have to back out commissions they are not having to pay but it is still a number north of $10m). The company anticipates expenses a bit above 80 percent of revenues. I am not an accountant but that doesn’t price in the cost of short term borrowing if necessary. It has already baked in a $169m loss. Cash is very very unlikely to be strong at the moment. (This is not investment advice. It is back of the envelope message boarding to speculate why NCLH would probably love to be able to suspend cash refunds even for a day.)
  21. I hope you are correct. We will see on 3/10. The way I read the faq the new terms are deemed applicable to all departures through 9/30. Including existing bookings. These terms have replaced the old terms on the website. The terms are that all fare components and payments can only be FCC. We will just have to wait and see if they will give cash back outside 120 days. If people can still take cash pursuant to the terms when they booked instead of FCC then it is no problem — for example if OP can still get 75 percent cash back instead of FCC that would be fine. It sounds as though they are putting OP off until 89 days. If they then claim OP only gets 50 percent cash or only can take FCC that is a problem.
  22. If you try to book a cruise out past 10/1/20 on the website right now it will not show you terms applicable to your deposit. It links you to the new peace of mind policy. I would not assume anything about what will happen to those cancellations at this time. They apparently believe they can retroactively change the terms for bookings even more than 120 days out so I would anticipate, until there is clarity, that they may try to hang on any deposits right now.
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