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NCL Bankruptcy Would Help Carnival Brands


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If NCL goes bankrupt their passenger base would have to move to another mass market cruise line for those that wish to cruise. Carnival's brands and RCL's brands would seem the likely choices. The cruise industry has too many berths already so this will cull the herd and subsequently raise prices when things get back to a more normal time. 

 

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

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17 minutes ago, cruzsnooze said:

If NCL goes bankrupt their passenger base would have to move to another mass market cruise line for those that wish to cruise. Carnival's brands and RCL's brands would seem the likely choices. The cruise industry has too many berths already so this will cull the herd and subsequently raise prices when things get back to a more normal time. 

 

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

Doesn't matter where their customer base may go ... you are still talking about people ... people losing their jobs on- and off-shore, people losing their livelihood ... not a pretty picture 

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The NCL ships will likely go to another cruiseline, along with their crews, and associated passenger loads....

 

 

 

Very unlikely that the almost new NCL ships will be retired or sit idle for very long

Srpilo

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Yes and no.  In the long run Carnival might benefit, but in the short and intermediate time frame this will make people reluctant to book cruises altogether.  No one wants to lose money in a bankruptcy.  I would not commit purchase anything that I might not get to enjoy.  What I am suggesting is that Carnival's immediate cash flow from its operations. will be affected by the Norwegian situation

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43 minutes ago, pms4104 said:

Doesn't matter where their customer base may go ... you are still talking about people ... people losing their jobs on- and off-shore, people losing their livelihood ... not a pretty picture 

It matters a lot. In order for cruising to continue to be successful it needs to downsize. The industry was overbuilt and the size of the ships were humongous. If NCL backs out that means more customers for the remaining ships and profitability. No different then land based business when they over saturate like Starbucks did they need to eliminate some stores. This is the reality of business, you need customers.

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Carnival and RCC will definitely benefit.  The cruise line industry was getting a little crowded, with too many ships.  My family will miss NCL, but it might improve the overall health of the industry, by thinning the herd.

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56 minutes ago, pms4104 said:

Doesn't matter where their customer base may go ... you are still talking about people ... people losing their jobs on- and off-shore, people losing their livelihood ... not a pretty picture 

 

Not really sure what you're point is.  People are hurting all around, not just in the cruise industry.  It's called a pandemic. 

 

But the notion that a particular cruise line could go under and that other cruise lines may absorb their customers very much matters.  You may or may not care but the topic is exactly what these forums are for. 

 

 

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NCL attracts very different cruisers then Princess.  Much more like RCL.  Princess ships do not offer the same amenities that NCL now offers.  We cruise on NCL when we take the teen grandkids.  Princess when its a adult cruise.

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And here is a different perspective, it could actually hurt CCL.  A bankruptcy does not always mean the end of operations.  Many business bankruptcies end up with a restructuring of debt making the company more likely to survive afterwards as a restructured entity.  The stockholders would be wiped out but business operations not necessarily so.  I can envision a leaner NCL competing with a debt burdened CCL (they took $6 billion at 12% interest) forcing CCL to restructure their own debt or go into bankruptcy themselves.  I am not predicting that this will happen, only that it is a possible outcome.

 

Note that the CNBC article states:

“our business and financial condition could be adversely affected and it may be necessary for us to reorganize our company in its entirety, including through  bankruptcy proceedings, and our shareholders may lose their investment in our ordinary shares.”

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

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30 minutes ago, dag144 said:

Yes and no.  In the long run Carnival might benefit, but in the short and intermediate time frame this will make people reluctant to book cruises altogether.  No one wants to lose money in a bankruptcy.  I would not commit purchase anything that I might not get to enjoy.  What I am suggesting is that Carnival's immediate cash flow from its operations. will be affected by the Norwegian situation

I had 2 cruises booked in 2021 with only a deposit paid. I canceled and got my refunds. I would never pay in full until final payment date. I have no desire now to cruise again because of COVID19, Noro, and anything new that comes around. I think that the cruise industry has gotten too big and the ships are huge. They seem to have lost control of themselves. When things look better for travel (probably not until fall 2021 for me, when I would feel safe) I'll look into a travel package to go somewhere.  Just my thoughts and feelings for myself.  I think I'm past cruising. I've taken several but I think the time has come for me to move on to something else. I just wonder how many others are feeling the same way and how it will effect the industry.

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1 minute ago, onboard2005 said:

I had 2 cruises booked in 2021 with only a deposit paid. I canceled and got my refunds. I would never pay in full until final payment date. I have no desire now to cruise again because of COVID19, Noro, and anything new that comes around. I think that the cruise industry has gotten too big and the ships are huge. They seem to have lost control of themselves. When things look better for travel (probably not until fall 2021 for me, when I would feel safe) I'll look into a travel package to go somewhere.  Just my thoughts and feelings for myself.  I think I'm past cruising. I've taken several but I think the time has come for me to move on to something else. I just wonder how many others are feeling the same way and how it will effect the industry.

You are not alone.  My whole extended family have no interest in cruising again.  They have decided on a land vacation next May.  I'm the lone holdout.

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Short-term, I think it benefits CCL - people less likely to book on a troubled carrier than one perceived as more financially sound.

 

Long-term - not good. The most likely outcome of Bankruptcy is that the Debt Holders end up owning the Company. It will be run as it has been, but with new owners. The new owners will have a lower cost basis (wiped out Equity holders), so lower total cost of operations. The industry will have the same number of ships, competing for the same passengers. It will take a while for supply and demand to rebalance. In the meantime, passengers can get good deals, but the cruise companies will have problems.

 

One other benefit of bankruptcy is that NCL will be able to get out of contracts for ships being built. That will help reduce future supply.

 

 

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50 minutes ago, bluesea321 said:

And here is a different perspective, it could actually hurt CCL.  A bankruptcy does not always mean the end of operations.  Many business bankruptcies end up with a restructuring of debt making the company more likely to survive afterwards as a restructured entity.  The stockholders would be wiped out but business operations not necessarily so.  I can envision a leaner NCL competing with a debt burdened CCL (they took $6 billion at 12% interest) forcing CCL to restructure their own debt or go into bankruptcy themselves.  I am not predicting that this will happen, only that it is a possible outcome.

 

 

Many Stock holders who are wiped out will not want to patronize NCl. If I loose the $12,500 I have with Princess I can gty you I will never cruise with a carnival product again and will hold a grudge. 

  If NCL comes out and their passengers don't loose any money then they will fare better. I think in general cruising is loosing it's status with so many people seeing the industry negatively right now. 

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19 minutes ago, cruzsnooze said:

Many Stock holders who are wiped out will not want to patronize NCl. If I loose the $12,500 I have with Princess I can gty you I will never cruise with a carnival product again and will hold a grudge. 

  If NCL comes out and their passengers don't loose any money then they will fare better. I think in general cruising is loosing it's status with so many people seeing the industry negatively right now. 

I’m with you on this and I have more shares in carnival corporation ! I was planning on passing them down to my kids and add the dividend income to my pension. That plan is dead in the water now 😤

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1 hour ago, bluesea321 said:

And here is a different perspective, it could actually hurt CCL.  A bankruptcy does not always mean the end of operations.  Many business bankruptcies end up with a restructuring of debt making the company more likely to survive afterwards as a restructured entity.  The stockholders would be wiped out but business operations not necessarily so.  I can envision a leaner NCL competing with a debt burdened CCL (they took $6 billion at 12% interest) forcing CCL to restructure their own debt or go into bankruptcy themselves.  I am not predicting that this will happen, only that it is a possible outcome.

 

Note that the CNBC article states:

“our business and financial condition could be adversely affected and it may be necessary for us to reorganize our company in its entirety, including through  bankruptcy proceedings, and our shareholders may lose their investment in our ordinary shares.”

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

This has been the norm in the airline industry for years. 

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I'm of the lean mean fighting machine opinion.  NCL will try to obtain clientele with lower pricing and benefits, they would likely extend Future Credits to passengers with current money in the mix. Watch out, bankruptcy may become the word of the day in the cruising business.

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I don't think John and Jane Q Public care about if a cruise line filed bankruptcy.  They'll just see the $$ to cruise.  With the reputation hit of cruising and if an extended recession happens..you'll see a huge oversupply of cabins and thus a big push to lower fares to fill cabins..then a push to lower costs to try to stay profitable

 

I think the RCL is vulnerable.  They have huge debt from their expensive ships, that they normally counter with premium prices...but could see a lot of families looking to save money with CCL and NCL.  DCL is pretty pricey, but have a limited supply..and well it's Disney.  HAL might be the big loser with their mature clientele..but then again..do they siphon from the more luxury lines?  PCL?  I dunno..I just booked after a big hiatus from cruising because I feel like i got an amazing deal for the quality.  How will the cruise lines adapt and attract cruisers?   Interesting times. 

 

Think of the airlines post 9/11.  Many started adding perks such as extra legroom..then when 1 filed bankruptcy, the others had no choice..and then it became about capacity management.. fewer planes, fewer amenities, more up-charges, higher prices.

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NCL isn't going anywhere. Worst case is they'll enter into prepackaged bankruptcy and streamline their operation with a manageable debt load. The creditors take it in the shorts but they'd rather work with NCL than end up with nothing. This could put NCL in a better position than CCL or RCL but they have to make sure to be first to go down this path otherwise I don't think it will fly.

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Just like the airline industry, cruise industry will not be making money for couple of years due to consumer behavioral  change, incoming debt, government infrastructure and so on.  Cruise industry will face cash flow issues for many years to come.  Bankruptcy may be the only option. 

 

I wish them all the best.  We had fond memories and not once we ever came down with anything while cruising.  

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Keep in mind that a cruise line would not want to file for bankruptcy until it sees a path forward.  Better to declare BK once cruising starts back up and there is some idea of the business, than to do it when there is no idea of when cruising will start up.  THe reason is very simple.  Hard to get debt holders to agree to a restructuring if the path forward is not clear. If on the other hand cruising has started up, but you need to right size the company/debt load then you can get the debt holders to take equity in return for the debt.

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12 hours ago, cruzsnooze said:

 

After this was announced, NCL announced they had secured lines of credit and set up other paths to get $$$ which would allow them to at least get to next year even if none of their ships sailed the rest of this year.

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We reached the highest loyalty level on Princess a few years ago.  About 3/4 of our way there we began to cruise as our exclusive form of vacation.  When we first started cruising it was just one possible vacation option.  I think that when we stepped off our last cruise in February it may really have been our last cruise.  Why? The virus is still out there with no vaccine or effective treatment.  Maybe someday  we’ll have both.  But what about the next pandemic.  I knew there were some potential risks with cruising: norovirus, fire, sinking, severe listing, being sick and unable to get to a hospital, being disembarked by the captain, or being left behind.  I did a risk/benefit analysis and decided cruising was worth it.
 

I never imagined there could be a risk of  being held onboard in a foreign port  against my will for weeks while a deadly virus spreads.  Or sailing for weeks after the planned end of a voyage because no port will accept us (possibly not even Florida) and meanwhile other people onboard  are dying.  This significantly alters my risk/benefit analysis.  I still want to travel.  For weeks I’ve been watching YouTube and planning a road trip (no flying) to visit the national parks, or perhaps less popular scenic areas, when I consider it safe to do so.  It’s been a long time since we’ve done a leisurely road trip.  Yes, driving has risks too.  Everything has risks.  But I don’t know that I can ever get past the idea that I could be essentially imprisoned indefinitely on a ship waiting my turn to be infected. Or waiting for DH to be infected.  I  really doubt people who never cruised before will be chomping at the bit to give it a try.  So I wonder just how much the industry will need to contract.

Edited by Loreni
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Personally I do not wish for any of the cruise lines to fail. We enjoy cruising on both NCL and Princess, and occassionally Carnival. Each has its advantages and disadvantages. I am simply hopeful all lines find the best way to sail again while keeping passengers and crew as safe as possible. And (this is a big and) hopefully passengers will do their part as well to avoid sailing if ill, report illnesses, use handwashing/sanitizer stations, etc. 

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23 hours ago, cruzsnooze said:

If NCL goes bankrupt their passenger base would have to move to another mass market cruise line for those that wish to cruise. Carnival's brands and RCL's brands would seem the likely choices. The cruise industry has too many berths already so this will cull the herd and subsequently raise prices when things get back to a more normal time. 

 

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

 

Evidently NCL is not going bankrupt because they just announced that they raised over $2 Billion USD after their announcement yesterday and can sustain themselves for possibility a year.https://www.cnbc.com/2020/05/06/norwegian-cruise-line-raises-over-2-billion-to-withstand-well-over-a-year-without-revenue.html

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