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SS/RCCL Finances: Improving, Options, Questions??!!


TLCOhio
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1 hour ago, TLCOhio said:

 

 

   16 hours ago,  Lois R said: 

Hi folks., just a, quick note as the net is spotty. Only 175 on board. Having a good time.  We are at sea today and tomorrow.

But for the bigger, more long-term view of Silversea and Royal  Caribbean and their future/survival, that is less than one-third capacity for the Muse.  How can the cruise lines survive financially with that kind of passenger load?

 


I don’t have a reference but read somewhere over the past several months that as a rule of thumb cruise ships must cruise at 33% capacity to break even.  Not sure how that percentage translates across the whole industry as mass market lines for instance make much of their revenue through on board spending versus the luxury all-inclusive segment relies more on higher fares.  Certainly sailing with 33% or more capacity is better than sitting at a dock or anchored offshore but the considerable debt some lines have acquired and has to be serviced.  No idea how long they can last that way.   

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11 hours ago, Randyk47 said:


I don’t have a reference but read somewhere over the past several months that as a rule of thumb cruise ships must cruise at 33% capacity to break even.  Not sure how that percentage translates across the whole industry as mass market lines for instance make much of their revenue through on board spending versus the luxury all-inclusive segment relies more on higher fares.  Certainly sailing with 33% or more capacity is better than sitting at a dock or anchored offshore but the considerable debt some lines have acquired and has to be serviced.  No idea how long they can last that way.   

 

I think that 33% figure is at the very low end of break-even for the cruise industry, on the most modern and efficient cruises ships; it's more like 50-60% on other, older ships). Silver Original's is new, but she's small; I can't imagine the 33% rule of thumb working for a ship this small. I'd guess that 60% puts it about break-even; the profits would come from her being more full.

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On 8/21/2021 at 4:39 PM, TLCOhio said:

But for the bigger, more long-term view of Silversea and Royal  Caribbean and their future/survival, that is less than one-third capacity for the Muse.  How can the cruise lines survive financially with that kind of passenger load?

 

They can't.

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14 hours ago, cruiseej said:

I think that 33% figure is at the very low end of break-even for the cruise industry, on the most modern and efficient cruises ships; it's more like 50-60% on other, older ships). Silver Original's is new, but she's small; I can't imagine the 33% rule of thumb working for a ship this small. I'd guess that 60% puts it about break-even; the profits would come from her being more full.

 

Great points and questions as relates to the "break-even" point.

 

On Aug. 4, I had shared this background from their quarterly financial briefing: "A key point from their CFO is that certain of their ships require only a 35-50% occupancy to achieve a break-even point."  As noted earlier, the age of the ship can be a major factor as the newer ships tend to be more fuel-efficient, etc.  

 

As I vaguely re-call my college accounting courses many decades back, the legal and financial definitions for "break-even" can be a little varied and/or "creative..  That depends as to if and whether you just narrowly look at basic ship operating costs versus . . . including corporate overhead, marketing, capital costs/depreciation, etc., etc.

 

AND, now the cruise lines have billions of dollars more in borrowings to be paid off and carried.  Do those big debts get amortized on a long-term or shorter basis??  Many questions and ways to do those types of calculations.    Right?  

 

THANKS!  Enjoy!  Terry in Ohio

 

Kotor/Montenegro:  Exciting visual samples, tips, details, etc., for this scenic, historic location. Over 48,481 views.

http://boards.cruisecritic.com/showthread.php?t=1439193

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1 hour ago, TLCOhio said:

 

AND, now the cruise lines have billions of dollars more in borrowings to be paid off and carried.  Do those big debts get amortized on a long-term or shorter basis??  Many questions and ways to do those types of calculations.    Right?  


Right.  While the major umbrella cruise corporations had pretty significant billion dollar revenues before the pandemic their net profits were surprisingly low.  Despite my first degree being in business corporate high finance and creative bookkeeping has never been my forte.   My impression from the myriad of information Terry has shared with us is even under the best conditions it is going to take years and years for the cruise industry to recover and reach 2019 levels.   I still fear some may not.  The light at the end of the tunnel is still a bit dim.   

 

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1 hour ago, Randyk47 said:


Right.  While the major umbrella cruise corporations had pretty significant billion dollar revenues before the pandemic their net profits were surprisingly low.  Despite my first degree being in business corporate high finance and creative bookkeeping has never been my forte.   My impression from the myriad of information Terry has shared with us is even under the best conditions it is going to take years and years for the cruise industry to recover and reach 2019 levels.   I still fear some may not.  The light at the end of the tunnel is still a bit dim.   

 

And for some, the light may be a train!!

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On 8/22/2021 at 6:16 PM, A Tucson Guy said:

And for some, the light may be a train!!

 

Appreciate these great comments and follow-ups from our Arizona friend, Randy and Mr. Silver.  YES, many important financial and operational issues at work.  Many questions as Covid cases, sadly, seem on the upswing.  

 

From the Wall Street Journal late this afternoon, below are the stock charts for the three major cruise ones.  Generally, except for on Thursday, it was an Up, UP week for these stock prices.

 

Also, earlier the week, this major newspaper had they had this headline: “Cruise Line Investors Are Boarding the Wrong Ships" with this sub-headline: "Norwegian doubles down on vaccination requirements, but the kids will be all right at home.

 

Here are some of their story highlights: Norwegian Cruise Line Holdings  is doubling down on safety this year. Wall Street has taken the under on that bet.  The cruise line operator said this past week it is extending its guest vaccination requirement, which had been due to expire at the end of October, for all of its sailings through the end of the year. Because children under the age of 12 can’t currently get a Covid-19 vaccine, Norwegian’s policy means that these children aren’t allowed on its ships for now.   Fears that the Delta variant could hamper cruise lines’ long-awaited recovery have weighed on the sector lately. But Norwegian’s stock has been a particular underperformer this year, falling more than 7%, while shares of Carnival Corp. and Royal Caribbean Group have logged slight gains over that period.  Investors may be on the wrong side of this trade for multiple reasons. For one thing, Norwegian’s passengers are typically older, rendering the fact that young children can’t yet get vaccinations less relevant. For another, Norwegian’s brands skew more high end than those of its peers.   Luxury matters right now.  Data points seem to suggest consumers are booking cruises for bigger, 'bucket-list' trips rather than shorter weekend-like getaways.  If true, that is good news for Norwegian, which, along with Carnival, seems to have historically had relatively lower exposure to the Caribbean and many voyages to Alaska and Europe.

 

Full story at:

https://www.wsj.com/articles/cruise-line-investors-are-boarding-the-wrong-ships-11629554401

 

THANKS!  Enjoy!  Terry in Ohio

 

Dubrovnik!  Nice visual samples, tips, details, etc., for this super scenic and historic location. Over 48,126 views.    

http://boards.cruisecritic.com/showthread.php?t=1439227

 

From the Wall Street Journal, below are the stock value charts for the three major cruise lines during the past five trading days.  Going UP??!!.:

(Open your screen/viewer wider to see these visuals larger/better!)

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2123862571_ScreenShot2021-08-27at5_25_25PM.thumb.png.a27463ad0b09f3eb0bdd958151af7fc6.png

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From the Yahoo Finance website on Friday, they had this headline: “Carnival Stock Continues to Carry Weight of the ‘UnwantedPassengers with these highlights: If you think Carnival stock is a good bet at almost $24, you might want to think again. Covid-19 is still very much still an 'unwanted passenger' on its cruise ships. As a result, a resumption to pre-pandemic cruising seem like they’re far in the distance.  A recent story detailing the death of a 77-year-old woman who took a Carnival cruise with her family, leaving Galveston, had her became ill while on a port visit in Belize. The ship doctor gave the retired Sunday school teacher a Covid-19 test. It was positive. She was transferred to a Belize hospital. Eventually, she was sent by air ambulance to Oklahoma, where she died while on a ventilator on Aug. 14.  She was fully vaccinated.   And, yet, she still got Covid and died. It shows what risks are involved in taking a cruise at this point, vaccinated or not.   According to Cruise Law News, a Carnival chief engineer died of Covid-19 after working for the company for more than 34 years with nary a mention from the company.   As my InvestorPlace colleague, Larry Ramer, recently wrote, cruise lines may again face no-sail bans due to the surge in cases from the Delta variant.

 

Is this too negative?  Here is more of his perspective from this article/analysis: "Covid-19 is not going away. Cruise lines were already giant Petri dishes. This ratchets up the health risks of cruising. For this reason, it appears that the near-term health of cruise line stocks, Carnival included, is not good.  The Motley Fool’s Rich Smith recently highlighted the fact that cruising isn’t enjoyable these days. You don’t have to tell the passengers of the Carnival Vista that.  'Parents of unvaccinated children under 12 years of age say that there is ‘nothing for the kids to do at all, besides the pool’ and that kids couldn’t get off the ship when it visited ports,' Smith wrote on Aug. 19.   How will Carnival maintain a balance between safety and a quality cruising experience if Covid-19 sticks around and becomes a part of daily life?  Every little action on cruise ships will be under a microscope in the weeks and months ahead."

 

Full story at:

https://finance.yahoo.com/news/carnival-stock-continues-carry-weight-100014200.html

 

THANKS!  Enjoy!  Terry in Ohio

 

Athens & Greece: Many visuals, details from two visits in a city with great history, culture and architecture.  Now at 40,894 views.

http://boards.cruisecritic.com/showthread.php?t=1101008

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Especially today, Friday, Sept 3, the stock market was very, very unkind and negative towards the three major cruise ship lines.  Not sure exactly why.  My guess is that the rising Covid numbers in the United States and for other arts of the world has caused this movement.  

 

Any better speculation, ideas and/or information?

 

THANKS!  Enjoy!  Terry in Ohio

 

Lisbon, NWSpain, Bordeaux/Brittany: Live/blog, June 2017 from Portugal to France along scenic Atlantic Coast on the Silver Spirit.  Now at 31,926 views.  Many interesting pictures, details for history, food, culture, etc.:

www.boards.cruisecritic.com/showthread.php?t=2511358

 

From the Wall Street Journal, below are the stock value charts for the three major cruise lines during the past five trading days.  Going down, special during today's trading?  Why??!!:

(Open your screen/viewer wider to see these visuals larger/better!)

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1448891796_ScreenShot2021-09-03at4_08_15PM.thumb.png.66158a91fc0206a900e166e3ab15451a.png

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The monthly August jobs report was much worse than expected today , non-farm payrolls were ~500,000 jobs shy of expectations.  Many are pointing towards the Delta variant as a major cause of the shortfall.   Additionally within the report leisure & hospitality jobs were weak.    Slower economic growth and more Covid not a good recipe for cruise stocks.  The "big three" cruise stocks mentioned above were some of the worst performers in the S&P 500 today.

 

 

jobs report summary

 

 https://www.cnbc.com/2021/09/03/jobs-report-august-2021.html

 

 

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4 hours ago, TLCOhio said:

Especially today, Friday, Sept 3, the stock market was very, very unkind and negative towards the three major cruise ship lines.  Not sure exactly why.  My guess is that the rising Covid numbers in the United States and for other arts of the world has caused this movement.  

 

Any better speculation, ideas and/or information?

 

THANKS!  Enjoy!  Terry in Ohio

 

Lisbon, NWSpain, Bordeaux/Brittany: Live/blog, June 2017 from Portugal to France along scenic Atlantic Coast on the Silver Spirit.  Now at 31,926 views.  Many interesting pictures, details for history, food, culture, etc.:

www.boards.cruisecritic.com/showthread.php?t=2511358

 

 

From the Wall Street Journal, below are the stock value charts for the three major cruise lines during the past five trading days.  Going down, special during today's trading?  Why??!!:

(Open your screen/viewer wider to see these visuals larger/better!)

1636135291_ScreenShot2021-09-03at4_06_32PM.thumb.png.f6ba156b03ad2c72e6677af4a00511d8.png

 

410135360_ScreenShot2021-09-03at4_07_31PM.thumb.png.77bc50396ee9edc45089194d9c887d5f.png

 

1448891796_ScreenShot2021-09-03at4_08_15PM.thumb.png.66158a91fc0206a900e166e3ab15451a.png


I’m a bit torn between the notion that I have often thought of the stock market as not exactly based on financial analyst as much as sometimes an emotional reaction.   That said I think it’s very possible that despite the initial and still somewhat euphoria of a potential “return to normal” the cold hard facts for investors are that it is going to take years for cruise lines to recover.  I really hope I’m not in a “I told you so” moment but I am more of the thought that some if not many cruise lines will not survive the still very daunting long haul, at least not as we knew them pre-pandemic.   

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13 hours ago, Randyk47 said:

I’m a bit torn between the notion that I have often thought of the stock market as not exactly based on financial analyst as much as sometimes an emotional reaction.   That said I think it’s very possible that despite the initial and still somewhat euphoria of a potential “return to normal” the cold hard facts for investors are that it is going to take years for cruise lines to recover.  I really hope I’m not in a “I told you so” moment but I am more of the thought that some if not many cruise lines will not survive the still very daunting long haul, at least not as we knew them pre-pandemic.   

 

YES!!  Very good comments and follow-ups from RetiredandTravel, A Tucson Guy and Randy.  It looks as if RetiredandTravel was smart and ahead of curve with those initial comments. 

 

From this below-linked website analysis website yesterday, they had this headline: Why Royal Caribbean and Carnival Corporation Stocks Slumped Today with these highlights: Shares of cruise line stocks Carnival Corporation and Royal Caribbean both slumped in Friday trading, closing the day down 4.4% and 4.2%, respectively.  The jobs report -- and Delta -- seem to blame.   The U.S. Department of Labor reported today that the U.S. economy added only 235,000 jobs to its pandemic-wreaked rolls in August -- less than one-third of the 720,000 new jobs that economists had forecast. CNBC called the report 'the worst since January,' observing that 'heightened fears of the pandemic and the impact [of] rising COVID cases' appear to be behind the sad numbers.   And investors can draw two conclusions from this: First, the delta variant of COVID-19 is acting as a drag on the economy. At the same time as it depresses jobs growth, it's likely that the continued spread of the virus is going to weigh on the minds of anyone considering getting into proximity with a lot of people -- for example, bottled up on a cruise ship for days at a time alongside thousands of strangers.  And second, the corollary to that is that the more COVID-19 depresses jobs growth, the fewer people will have jobs -- and disposable income -- to spend on cruises even if they are inclined to cruise.  In both respects, therefore, a weak jobs report bodes ill for the cruise industry.

 

Full story at:

https://www.fool.com/investing/2021/09/03/why-royal-caribbean-and-carnival-stocks-slumped/

 

THANKS!  Enjoy!  Terry in Ohio

 

Panama Canal? Early 2017, Fort Lauderdale to San Francisco adventure through Panama Canal.  Our first stops in Colombia, Central America and Mexico, plus added time in the great Golden Gate City. Now at 30,769 views.

http://boards.cruisecritic.com/showthread.php?t=2465580

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I was over in my old Holland America section here and was surprised to see how few of the HAL fleet are actually doing cruises.   Over on that section they post the daily whereabouts of the HAL fleet and it shows only two out of eleven ships in the fleet out with passengers.  One or two may be repositioning without passengers to start cruising but the others are anchored or docked.   I neither have the time or energy to check every cruise line and I’m not suggesting Holland America is representative of the industry as a whole but their numbers are concerning.   

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11 minutes ago, Randyk47 said:

I was over in my old Holland America section here and was surprised to see how few of the HAL fleet are actually doing cruises.   Over on that section they post the daily whereabouts of the HAL fleet and it shows only two out of eleven ships in the fleet out with passengers.  One or two may be repositioning without passengers to start cruising but the others are anchored or docked.   I neither have the time or energy to check every cruise line and I’m not suggesting Holland America is representative of the industry as a whole but their numbers are concerning.   

Hi Randy,🙂 I peruse the Celebrity boards.....(my old line LOL) and from what I can see, they have very few ships sailing as well. More than 2 but not many more. I think around 4 or 5..........I don't care to check the other forums either but I am gathering most don't have many ships sailing either.

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30 minutes ago, Lois R said:

Hi Randy,🙂 I peruse the Celebrity boards.....(my old line LOL) and from what I can see, they have very few ships sailing as well. More than 2 but not many more. I think around 4 or 5..........I don't care to check the other forums either but I am gathering most don't have many ships sailing either.


By my count Celebrity has 13 “classic” ships so with four or five ships sailing that’s 30-38% of their fleet.   That’s better than HAL’s 18% but still very low.   I assume like Silversea few if any ships are sailing full which also isn’t great news.  It certainly means more to the non-all inclusive lines that rely more heavily on onboard spending for revenue.   

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I am more optimistic of the future of the cruise industry than some of you seem to be.  Did one not expect that the cruise business would have to begin again with "baby steps"?  Guests' confidence/trust needed to be re-earned.  Ports that guests want to visit must be open and willing to allow visitors.  

 

It would be nice to have a concise list of what ships of all of the cruise companies are sailing with guests.  Or are about to sail.  Today, Port Canaveral have 3 Carnival ships at dock including Mardi Gras which has been sailing.  (Whether Magic and Conquest are embarking guests, I don't know.)  There is a Disney ship at dock as well.  

 

I have held RCI and CCL stock for many years.  Through thick and thin; they will survive.  NCLH?  There's reasons why I have not invested in that Company and won't.  

 

 

 

 

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On 9/4/2021 at 12:49 PM, Randyk47 said:

By my count Celebrity has 13 “classic” ships so with four or five ships sailing that’s 30-38% of their fleet.   That’s better than HAL’s 18% but still very low.   I assume like Silversea few if any ships are sailing full which also isn’t great news.  It certainly means more to the non-all inclusive lines that rely more heavily on onboard spending for revenue.   

 

Appreciate this great research by Randy, plus the important, added comments and follow-ups.  Keep it coming!

 

Below are the stock charts for the past week.  "ROCKY" was a famous movie from 1976 that featured Sylvester Stallone and won the Best Picture Oscar. But, in my view, that phrase/title also describes the way that investors looked at the value and prospects for the three major cruise line companies.  Right or wrong?

 

Also, from the Wall Street Journal  this morning, they had this headline: Travel and Covid-19 Testing: What to Know if You’re Flying or Taking a Cruisewithin sub-headline: "Some at-home tests are permitted, but leave yourself plenty of time to test before your trip.”

 

Here are some of the story highlights: More travel destinations are now requiring travelers to present negative Covid-19 tests for entry, even those who are fully vaccinated. The changes are adding fresh complexity to an already-confounding time for travel.   Travelers are struggling to both keep up with changing test guidelines and find acceptable tests that will provide results by the time they need to fly.   After the European Union removed the U.S. from its “safe” list of countries, some member nations began imposing new rules for travelers. Italy, for example, now requires fully vaccinated travelers to submit a negative test taken within 72 hours of arrival in the country.  And beginning Sept. 13, the Centers for Disease Control and Prevention will require fully vaccinated cruise passengers to submit proof of a negative Covid-19 test taken within two days of boarding a ship.  'Things change daily,' says TA Susan Peavey, in Marshfield, Mass. Travelers have to understand each country’s rules and regulations, she says, and in some cases additional requirements at destinations, such as resorts that are now requiring proof of vaccination.  Finding the correct tests within the allowed time frame is proving challenging. In some areas of the country, Covid-19 tests are harder to come by, and acceptable at-home tests can be costly.

 

Full story at:

https://www.wsj.com/articles/travel-and-covid-19-testing-what-to-know-if-youre-flying-or-taking-a-cruise-11631458800

    

THANKS!  Enjoy!  Terry in Ohio

 

From late 2018, see “Holy Lands, Egypt, Jordan, Oman, Dubai, Greece, etc.”, with many visuals, details and ideas for the historic and scenic Middle East. Now at 20,049 views.  Connect at:

www.boards.cruisecritic.com/topic/2607054-livenautica-greece-holy-lands-egypt-dubai-terrypix’s/

 

From the Wall Street Journal, below are the stock value charts for the three major cruise lines during the past five trading days.  Is "ROCKY" a good summary for this past week??!!:

(Open your screen/viewer wider to see these visuals larger/better!)

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1440986198_ScreenShot2021-09-12at12_57_40PM.thumb.png.6b3321c7bf78596de7ba983bd093f390.png

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How hard has it been to pull staff and crew back for any of the larger cruise lines?

 

Certainly for Holland America from my own 600 day experience with them, their wonderful crews are the primary reason we chose them and kept coming back for more. It as the HAL crew and their in-house training that made  this mass market cruise line feel special.

 

If they can't put that same package together, will Holland America keep its unique and loyal mass market niche?

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3 hours ago, OlsSalt said:

How hard has it been to pull staff and crew back for any of the larger cruise lines?

 

Certainly for Holland America from my own 600 day experience with them, their wonderful crews are the primary reason we chose them and kept coming back for more. It as the HAL crew and their in-house training that made  this mass market cruise line feel special.

 

If they can't put that same package together, will Holland America keep its unique and loyal mass market niche?

 

An excellent comment and one that, I believe, will be shared by most HAL Mariners.  

 

The good news, I think, is that the reports that I read on the HAL Message Board from those who have cruised this Summer on the Nieuw Amsterdam have been quite positive with regard to interactions/service with the staff.  The crew seem to be as happy to be able to interact with the guests as the guests are with them.

 

The question, as you rightly form it, is will HAL be able to staff the other ships with experienced former staff members?  

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On 9/12/2021 at 2:59 PM, TLCOhio said:

The changes are adding fresh complexity to an already-confounding time for travel.   Travelers are struggling to both keep up with changing test guidelines and find acceptable tests that will provide results by the time they need to fly

 

One reason why I won't be booking a cruise any time soon.  Those that want to do so must want to endure more stress in their life than I choose to do.  

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19 minutes ago, rkacruiser said:

One reason why I won't be booking a cruise any time soon.  Those that want to do so must want to endure more stress in their life than I choose to do.  

 

No, the equation is whether the stress is greater than or less than the joy of being at sea again. 😉

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4 hours ago, cruiseej said:

 

No, the equation is whether the stress is greater than or less than the joy of being at sea again. 😉

I had a fantastic time on both my Greece sailing and my Alaska cruise😀.......being on the ship, on the water.......ahhhhhhhhhhhh...........nothing better.

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