Norwegian Cruise Line May Go Out of Business

[Carol From California]

It's all over the news. A few links below. What will happen to those of us who have deposits with Oceania and with those who are waiting for refunds? Will the credit card company refund if Oceania doesn't? 

 

https://www.cnbc.com/2020/05/05/norwegian-cruise-line-says-theres-substantial-doubt-about-its-ability-to-continue-as-a-going-concern.html

 

https://www.cnn.com/2020/05/05/business/norwegian-cruise-line/index.html

 

https://www.businessinsider.com/norweigan-cruise-lines-warns-of-substantial-doubt-continue-operating-business-2020-5

 

https://www.orlandosentinel.com/coronavirus/jobs-economy/os-bz-norwegian-cruise-line-holdings-sec-filing-concern-20200505-p5l5wcqz2je67bbbsnvxwcsqym-story.html

[Flatbush Flyer]

4 minutes ago, Carol From California said:

It's all over the news. A few links below. What will happen to those of us who have deposits with Oceania and with those who are waiting for refunds? Will the credit card company refund if Oceania doesn't? 

 

https://www.cnbc.com/2020/05/05/norwegian-cruise-line-says-theres-substantial-doubt-about-its-to-continue-as-a-going-concern.html

 

https://www.cnn.com/2020/05/05/business/norwegian-cruise-line/index.html

 

https://www.businessinsider.com/norweigan-cruise-lines-warns-of-substantial-doubt-continue-operating-business-2020-5

 

https://www.orlandosentinel.com/coronavirus/jobs-economy/os-bz-norwegian-cruise-line-holdings-sec-filing-concern-20200505-p5l5wcqz2je67bbbsnvxwcsqym-story.html

What's with the "fake news" title? Read the articles!

No one is "going out of business" (particularly with the first of many NCLH restructuring investments by private equity weighing in at $400 million). 

Will there be changes? Of course. Will Oceania disappear? No - Of all the NCLH lines, it has the most flexible size, repeat passenger base and industry positioning to absorb ship jumpers from NCL and Regent.

[Carol From California]

3 minutes ago, Flatbush Flyer said:

What's with the "fake news" title? Read the articles!

No one is "going out of business" (particularly with the first of many NCLH restructuring investments by private equity weighing in at $400 million). 

Will there be changes? Of course. Will Oceania disappear? No - Of all the NCLH lines, it has the most flexible size, repeat passenger base and industry positioning to absorb ship jumpers from NCL and Regent.

 

The headlines in these four articles:

Norwegian Cruise Lines says there's 'substantial doubt' about its ability to continue operating

 

Norwegian Cruise Line sees ‘substantial doubt’ about its future, warns of possible bankruptcy

Norwegian Cruise Line may go out of business

Norwegian Cruise Line Holdings raises flag it could face bankruptcy

 

I hope that you are correct. Headlines are pretty scary. 

 

[JVNYC]

I'm reading what you are reading Carol.....bankruptcy!  I'm not seeing any silver lining in any news article, period.

 

[BenMurphy]

trying to contact my agent now.

We've paid a deposit and are due to pay the balance this week.

 

I really don't know what to do as I was having second thoughts about this cruise anyway.

 

[Flatbush Flyer]

11 minutes ago, JVNYC said:

I'm reading what you are reading Carol.....bankruptcy!  I'm not seeing any silver lining in any news article, period.

 

Bankruptcy and "Going Out of Business" are vastly different things. 

No private equity firm(s) would invest $400 million in a company that has no chance of emerging from a restructuring (either on its own or as a result of bankruptcy).

 

[JVNYC]

Whatever happens the cruise will never be the same.  Cutbacks through the roof.  No thanks.

[Carol From California]

3 minutes ago, Flatbush Flyer said:

Bankruptcy and "Going Out of Business" are vastly different things. 

No private equity firm(s) would invest $400 million in a company that has no chance of emerging from a restructuring (either on its own or as a result of bankruptcy).

 

I hope you are correct. I have two cruises booked on Regent (2021) and one on Oceania (2020). The headlines in the articles seem to indicate they may not be able to continue operating.  I love these cruise lines and hope it does not happen.  

[JT1962]

The statements from the headlines are directly from the SEC filing by NCLH yesterday. Those are much more believable than anything from the Sales and Marketing departments. The handling of FCCs and Refunds will all depend on if the file bankruptcy (very likely), what type of bankruptcy reorganization (most likely) or liquidation, and the terms of the bankruptcy.

I would not be surprised to see all of the parent companies of the cruise lines reducing the number of cruise lines they have over the next few years either through consolidation, sale, re-branding some ships or shutting down. Oceania and Regent Seven Seas seem the most likely to be merged or sold.

[Hawaiidan]

24 minutes ago, Flatbush Flyer said:

What's with the "fake news" title? Read the articles!

No one is "going out of business" (particularly with the first of many NCLH restructuring investments by private equity weighing in at $400 million). 

Will there be changes? Of course. Will Oceania disappear? No - Of all the NCLH lines, it has the most flexible size, repeat passenger base and industry positioning to absorb ship jumpers from NCL and Regent.

Not fake  news....NCL  in talking to the SEC after talking to Price Waterhouse ( their accountant) expressed there is substantial  doubt that NCL  can survive as a company.  if they can not get ADDITIONAL financing, beyond the 400 mil they just got.

If they fold... they are going to have a lot of haardware out there and owe money on it... Someone is going to buy  at a firesale price   the ships will not just be scrapped  they will sail to pay off the people who  financed them......   What O will look like will be up in the air....  Proably  you will see the specialties go from inclusive to pay  for starters  and reduced   and no more O life and air included....      THats my guess  if the Stuff hits the fan.     But its always darkest before the dawn.....  We all are stressed and seeing no good around every corner.  It only human nature to  be swayed by the media fueled daily panic...  Too much information, Too frequent..........overdose

 

[mrlevin]

Mr. Del Rio has experience prepping a cruise line to go into bankruptcy; he might even buy the ships he wants (again) after the bankruptcy.

[KirkNC]

Everyone calm down, this was part of boilerplate risk disclosures that accompanied an announcement that a pretty smart guy invested $400 million in NCL.  It’s a bleak disclosure but it is a risk so that have to say it possible.  The news outlets like the dirty laundry.  

[KirkNC]

Here are all the risks disclosured, # 15 is what is causing all the hoopla.

 

• COVID-19 on our financial condition and operations, which adversely affects our ability to obtain acceptable financing in an amount equal to the resulting reduction in cash from operations, and the current, and uncertain future, other impacts of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), which are expected to continue to adversely impact our results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price;
   
• our ability to develop strategies to enhance our health and safety protocols to adapt to the current pandemic environment’s unique challenges once operations resume and to otherwise safely resume our operations when conditions allow; 
   
• coordination and cooperation with the CDC, the federal government and global public health authorities to take precautions to protect the health, safety and security of guests, crew and the communities visited and the implementation of any such precautions;
   
• the accuracy of any appraisals of our assets as a result of the impact of COVID-19 or otherwise;
   
• the ability to obtain deferrals on our debt payments;
   
• our success in reducing operating expenses and capital expenditures and the impact of any such reductions;
   
• our guests’ election to take cash refunds in lieu of future cruise credits or the continuation of any trends relating to such election;
   
• trends in, or changes to, future bookings and our ability to take future reservations and receive deposits related thereto;
   
• our ability to work with lenders and others or otherwise pursue options to defer or refinance our existing debt profile, near-term debt amortization, newbuild related payments and other obligations and to work with credit card processors to satisfy current or potential future demands for collateral on cash advanced from customers relating to future cruises;
   
• adverse events impacting the security of travel, such as terrorist acts, armed conflict and threats thereof, acts of piracy, and other international events;
   
• adverse incidents involving cruise ships;
   
• adverse general economic and related factors, such as fluctuating or increasing levels of unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets, and perceptions of these conditions that decrease the level of disposable income of consumers or consumer confidence;
   
• the spread of epidemics, pandemics and viral outbreaks;
   
• our anticipated need for additional financing, which may not be available on favorable terms, or at all, and may be dilutive to existing shareholders;
   
• our ability to raise sufficient capital and/or take other actions to improve our liquidity position or otherwise meet our liquidity requirements that are sufficient to eliminate the substantial doubt about our ability to continue as a going concern;
   
• an impairment of our trademarks, trade names or goodwill, including in connection with the preparation of our financial statements as of March 31, 2020;
   
• breaches in data security or other disturbances to our information technology and other networks or our actual or perceived failure to comply with requirements regarding data privacy and protection;
   
• changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs;
   
• mechanical malfunctions and repairs, delays in our shipbuilding program, maintenance and refurbishments and the consolidation of qualified shipyard facilities;
   
• the risks and increased costs associated with operating internationally;
   
• fluctuations in foreign currency exchange rates;
   
• the unavailability of ports of call;
   
• overcapacity in key markets or globally;
   
• our expansion into and investments in new markets;
   
• our inability to obtain adequate insurance coverage;
   
• our indebtedness and restrictions in the agreements governing our indebtedness that require us to maintain minimum levels of liquidity and otherwise limit our flexibility in operating our business, including the significant portion of assets that are collateral under these agreements;
   
• pending or threatened litigation, investigations and enforcement actions;
   
• volatility and disruptions in the global credit and financial markets, which may adversely affect our ability to borrow and could increase our counterparty credit risks, including those under our credit facilities, derivatives, contingent obligations, insurance contracts and new ship progress payment guarantees;
   
• our inability to recruit or retain qualified personnel or the loss of key personnel or employee relations issues;
   
• our reliance on third parties to provide hotel management services for certain ships and certain other services;
   
• future increases in the price of, or major changes or reduction in, commercial airline services;
   
• our inability to keep pace with developments in technology;
   
• changes involving the tax and environmental regulatory regimes in which we operate; and
   
• other factors set forth under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019.

Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown.

The above examples are not exhaustive and new risks emerge from time to time. Such forward-looking statements are based on our current beliefs, assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future. These forward-looking statements speak only as of the date made. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change of events, conditions or circumstances on which any such statement was based, except as required by law.

 

Edited May 5, 2020 by KirkNC

[Flatbush Flyer]

19 minutes ago, Carol From California said:

I hope you are correct. I have two cruises booked on Regent (2021) and one on Oceania (2020). The headlines in the articles seem to indicate they may not be able to continue operating.  I love these cruise lines and hope it does not happen.  

Headlines are "click bait."

[Paulchili]

30 minutes ago, BenMurphy said:

trying to contact my agent now.

We've paid a deposit and are due to pay the balance this week.

 

I really don't know what to do as I was having second thoughts about this cruise anyway.

 

What in the world are you thinking?

I wouldn't pay a balance these days even without the news of bankruptcy - now I definitely would not do so.

You'll be lucky to get you deposit back.

[Flatbush Flyer]

 

18 minutes ago, KirkNC said:

Everyone calm down, this was part of boilerplate risk disclosures that accompanied an announcement that a pretty smart guy invested $400 million in NCL.  It’s a bleak disclosure but it is a risk so that have to say it possible.  The news outlets like the dirty laundry.  

Plus 1.

I remain convinced that Oceania will outsurvive NCL if for no other reasons than the manageable size and a passenger base that overall will be able to pay any increased cruise costs. And, I do expect that Oceania and Regent eventually will be merged. A lot of their administrative functions are already consolidated. 

[Flatbush Flyer]

1 minute ago, Paulchili said:

What in the world are you thinking?

I wouldn't pay a balance these days even without the news of bankruptcy - now I definitely would not do so.

You'll be lucky to get you deposit back.

Interesting conundrum for some of us.

We've gotten our expected refunds on two affected cruises (was supposed to be on our way to Insignia today). We've also got two time limited FCCs that, together, will pretty much pay our November 2020 cruise final pay (due in June). So, little to lose if we stay with the program and keep moving FCCs forward until things settle into a new normal.

[Paulchili]

4 minutes ago, Flatbush Flyer said:

 

Plus 1.

I remain convinced that Oceania will outsurvive NCL if for no other reasons than the manageable size and a passenger base that overall will be able to pay any increased cruise costs. And, I do expect that Oceania and Regent eventually will be merged. A lot of their administrative functions are already consolidated. 

What about the refund of fully paid and cancelled cruises and deposits. What are the chances of getting those back, esp in Chapt 11?

[Classiccruiser777]

3 minutes ago, Flatbush Flyer said:

 

Plus 1.

I remain convinced that Oceania will outsurvive NCL if for no other reasons than the manageable size and a passenger base that overall will be able to pay any increased cruise costs. And, I do expect that Oceania and Regent eventually will be merged. A lot of their administrative functions are already consolidated. 

Perhaps Apollo, the private equity firm, will snap up Prestige Cruise Holdings, the parent company of Oceania Cruises and Regent Seven Seas Cruises, in the event of liquidation or reorganization. The business model for both lines was successful so there could be real value in doing so.

[Hawaiidan]

It might be worthy of noting that  United Airlines, and  Chrysler, Johns Manville, filed bankrupt and reorganized and are back in business...      Companies who own or possess large capital things  ( Planes, Factories Ships) are not just going to totally fail......It is in everyone selfish best interest to keep them going

[Flatbush Flyer]

2 minutes ago, Paulchili said:

What about the refund of fully paid and cancelled cruises and deposits. What are the chances of getting those back, esp in Chapt 11?

Yes- that's the big "what if?".

And that is why I believe premium/luxury lines will survive. The bulk of their passenger base will be better able to accept FCCs and wait things out. 

I must admit though that I am glad I've only got book onboard deposits to worry about right now. And one of the three is for 2022.

So, as our November cruise final pay June date fast approaches, it will be interesting to see if I'm willing to pay the $1-2k balance (after using the FCCs) hoping we'll actually cruise OR get more FCCs that will be worth more than the paper they're written on.

 

[Andee]

In September, 2001, Renaissance cruise line went bankrupt 3 days before we were scheduled to board.

We contacted Visa and they refunded the entire amount (that we had paid in January) in about 3 weeks.

[LHT28]

I do not understand all this  high finance  but I think  people need to take a deep breath

 Panic  will surely kill  the industry

JMO

 

 Read the SEC filing report 

https://www.sec.gov/ix?doc=/Archives/edgar/data/1513761/000110465920056537/nclh-20200416x8k.htm

 

  other  reports

http://www.nclhltdinvestor.com/press-releases?field_nir_news_date_value[min]=2020&items_per_page=10#views-exposed-form-widget-news-widget-news-ul

 

[Classiccruiser777]

6 minutes ago, LHT28 said:

I do not understand all this  high finance  but I think  people need to take a deep breath

 Panic  will surely kill  the industry

JMO

 

 Read the SEC filing report  ( sorry cannot find it right now)

  other  reports

http://www.nclhltdinvestor.com/press-releases?field_nir_news_date_value[min]=2020&items_per_page=10#views-exposed-form-widget-news-widget-news-ul

 

The people that do well are those that don’t panic.

[LHT28]

1 minute ago, Classiccruiser777 said:

The people that do well are those that don’t panic.

 True

When the market crashed in 2008  we  just  waited it out  while other  we know took the hit & sold low 😉

 We recovered our $  +