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RCI bankruptcy possibility - deposits and FCCs


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Just read an article saying Royal has a very good chance of going bankrupt (source may not be best but still raises good questions). I know if this happens, there may not be enough money to go around to return future cruise deposits. Anyone else concerned? Also does cruise insurance cover provider bankruptcy?

 

https://www.ccn.com/the-u-s-stock-market-crash-will-bankrupt-these-3-companies/

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I for one have been very concerned about this possibility. I think it is prudent that RCL reduce its final payment to be 60 days prior to sailing.  I also think it should be returning cash versus FCC.  I will not pay for anymore cruises because frankly the FCC would be worthless should the company go bankrupt.  I am also cancelling cruise planner purchases for shore excursions and drink packages until we have a better understanding of how RCL will survive this storm.  

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I for one have been very concerned about this possibility. I think it is prudent that RCL reduce its final payment to be 60 days prior to sailing.  I also think it should be returning cash versus FCC.  I will not pay for anymore cruises because frankly the FCC would be worthless should the company go bankrupt.  I am also cancelling cruise planner purchases for shore excursions and drink packages until we have a better understanding of how RCL will survive this storm.  

I don’t see the government letting the cruise industry go bankrupt


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The article makes a few points that are way questionable; 1), their complete dismissal of a bailout is based on 0 facts, the cruise industry lobby is massive and there are several representatives from both parties who work to help the cruise lines out. So far I've seen 4 members of Congress already talking about how a bailout should be given if needed and only 1 who has said that a bailout should be avoided until the cruise lines make some pro-America changes. Nobody has come out against a bailout yet (of course, that could come once one is actually proposed)

 

2) The "more than half of it's value" that RCCL lost was purely in the stocks, not in actual tangible debt. 

 

3) The article says their debt has skyrocketed, but the document they link to shows a different story. Debt has gone from 12-17B over the past 5 years while the value of their assets have risen from 20-30B. Their assets are growing at double the rate of their debt.

 

All that being said, yes, it's definitely possible that Royal Caribbean will go bankrupt, although I highly doubt it. 

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The question is, can Royal survive a 60
day global hiatus with zero government bailout? 
 
Most likely not. 
I think they're fine. For now.

But which government is supposed to bail them out? The one where they're headquartered (USA), the one where they're incorporated (Liberia), or the one where their ships are registered (Bahamas)?
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27 minutes ago, hapster85 said:

I think they're fine. For now.

But which government is supposed to bail them out? The one where they're headquartered (USA), the one where they're incorporated (Liberia), or the one where their ships are registered (Bahamas)?

 

Donnie is in bed with the cruise lines, they'll be just fine. 

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1 hour ago, awestover89 said:

 

 

3) The article says their debt has skyrocketed, but the document they link to shows a different story. Debt has gone from 12-17B over the past 5 years while the value of their assets have risen from 20-30B. Their assets are growing at double the rate of their debt.

 

 

Are those assets newly built and renovated ships? If so, they could loose value quickly. Who wants to buy a cruise ship in this climate? I guess they could be converted to cargo ships, or quarantine ships.

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4 minutes ago, HalfHand said:

Bankruptcy doesn't mean they are out of business. With interest rates dropping they may declare bankruptcy just to reorganize all their debts at a much better rate. That won't effect FCC at all.

 

Oh absolutely man. Tell that to people, such as myself, that have worked at corporations that have gone through Chapter 11. Your gift certificate will be just fine afterwards, believe me.  😉

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1 minute ago, MoniMommy said:

I wonder why Royal is more likely to go bankrupt than NCL or Carnival?

 

 

They have sunk a lot of money into revitalizing old ships...a lot of money. Much more than the equivalent budget cruiselines. 

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Thanks everyone, makes me feel a bit better. I still say it’s best not to tie up any more money with Royal unless going on a cruise in the short term. Anyone know the answer to the cruise insurance part of the question, would bankruptcy be covered?

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In the near future, I think you will see a lot of cancellations with proposed upgrades / refurbs as well as new ship orders. Good chance their fleet is reduced with a few ships moth balled or sold. To literally stay afloat they are going to have to cost cut big time. Cruising as we now know it may be altered. 

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Wouldn’t 3rd party travel insurance cover this? Pretty sure you would get $ back...or are you guys only referring to existing FCC?

Edited by Borat
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At this stage I highly doubt to see RCL go bankrupt, they are together with Carnival the bigest and most successfull players in the industry. The company needs to be setup stable enough to survive a very bad year, obviously if you would have this repeat again in the near future they would be at very high risk to go bankrupt, but one storm in many years they should be able to make it through.

 

Companies such as Norwegian and possibly MSC would be more at risk, although MSC's main business is Cargo shipping but I am not following on how successfull this part of them is.

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17 minutes ago, Borat said:

Wouldn’t 3rd party travel insurance cover this? Pretty sure you would get $ back...or are you guys only referring to existing FCC?

I think if you if you have a booked cruise and bought travel insurance I think it would cover a bankruptcy, but you will need to read your policy.  It has been several since I bought insurance and can't remember if covers bankruptcies.

 

For FCC you would be at the mercy of RCCL and the other creditors, because in this case you would be a creditor.

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4 minutes ago, gatour said:

I think if you if you have a booked cruise and bought travel insurance I think it would cover a bankruptcy, but you will need to read your policy.  It has been several since I bought insurance and can't remember if covers bankruptcies.

 

For FCC you would be at the mercy of RCCL and the other creditors, because in this case you would be a creditor.

So for this cruise that was just cancelled for me, better off getting 100% refund as opposed to 125% FCC? Even if I have a cruise booked for the summer? Not really sure how realistic bankruptcy is at this point 

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Didn't read the article- but did it point out that not operating also reduces the expenses a lot?

 

MUCH less oil to burn (still need to run it to run the ship's core), MUCH less food to buy, much less supplies to buy, etc....

 

I may be wrong, but sitting in port and just supporting the basic systems will help them spread out the impact.  Better than sailing half full- as the fuel expense will be almost exactly the same with half income.

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