Carnival to Dump Six Ships

[Britboys]

4 minutes ago, molecrochip said:

Breaking: Carnival to dump thirteen ships.... more to follow.

Wow😮

[molecrochip]

Today's update from the press release:

• Aida to resume with all extra safety measures on board. Its the test case.
• Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).
• All ships to leave in next 90 days.
• Only five new builds out of eight due by 30/11/21 will be delivered.
• In addition new builds due in 2022/2023 will each be delayed.
• Operating costs reduced by $7bn (per annum equiv.).
• Capital expenditure reduced by $5bn over next 18 months.
• Have secured $10bn+ of additional liquidate with further facilities available. This sustains the company for another full year.
  • Includes $2.8bn raised in June
  • Includes  debt holiday on some new build debt for up to 12 months.
• In addition, company has $8bn of committed credit facilities to fund new build ship deliveries that were originally due through 2023.
• Monthly cash burn is now $650m.
• Cash refunds represent 50% of all refunds/FCC.
• For first three weeks of June, almost 60% of bookings were new. 40% were use of FCC.
• 2021 sales current on historical levels with slight hit on prices once adjusted for FCC etc.
• At end of may, customer deposits were $2.6bn, of which $121m is for Q3 (to Aug 20) and $353 for Q4 (to Nov 30). The rest is mainly FCC.
• Company have repatriated 260,000 guests and 77,000 crew. Crew repatriation continues.

[royallondon]

17 minutes ago, molecrochip said:

Today's update from the press release:

• Aida to resume with all extra safety measures on board. Its the test case.
• Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).
• All ships to leave in next 90 days.
• Only five new builds out of eight due by 30/11/21 will be delivered.
• In addition new builds due in 2022/2023 will each be delayed.
• Operating costs reduced by $7bn (per annum equiv.).
• Capital expenditure reduced by $5bn over next 18 months.
• Have secured $10bn+ of additional liquidate with further facilities available. This sustains the company for another full year.
  • Includes $2.8bn raised in June
  • Includes  debt holiday on some new build debt for up to 12 months.
• In addition, company has $8bn of committed credit facilities to fund new build ship deliveries that were originally due through 2023.
• Monthly cash burn is now $650m.
• Cash refunds represent 50% of all refunds/FCC.
• For first three weeks of June, almost 60% of bookings were new. 40% were use of FCC.
• 2021 sales current on historical levels with slight hit on prices once adjusted for FCC etc.
• At end of may, customer deposits were $2.6bn, of which $121m is for Q3 (to Aug 20) and $353 for Q4 (to Nov 30). The rest is mainly FCC.
• Company have repatriated 260,000 guests and 77,000 crew. Crew repatriation continues.

Molecrochip, your postings are much appreciated, thank you.

[pete14]

Much appreciated but depressing at times. Keep them coming though please.

[tring]

39 minutes ago, molecrochip said:

Today's update from the press release:

• Aida to resume with all extra safety measures on board. Its the test case.
• Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).
• All ships to leave in next 90 days.
• Only five new builds out of eight due by 30/11/21 will be delivered.
• In addition new builds due in 2022/2023 will each be delayed.
• Operating costs reduced by $7bn (per annum equiv.).
• Capital expenditure reduced by $5bn over next 18 months.
• Have secured $10bn+ of additional liquidate with further facilities available. This sustains the company for another full year.
  • Includes $2.8bn raised in June
  • Includes  debt holiday on some new build debt for up to 12 months.
• In addition, company has $8bn of committed credit facilities to fund new build ship deliveries that were originally due through 2023.
• Monthly cash burn is now $650m.
• Cash refunds represent 50% of all refunds/FCC.
• For first three weeks of June, almost 60% of bookings were new. 40% were use of FCC.
• 2021 sales current on historical levels with slight hit on prices once adjusted for FCC etc.
• At end of may, customer deposits were $2.6bn, of which $121m is for Q3 (to Aug 20) and $353 for Q4 (to Nov 30). The rest is mainly FCC.
• Company have repatriated 260,000 guests and 77,000 crew. Crew repatriation continues.

 

Thanks a lot, I am sure we all appreciate your information a great deal.

 

I am thinking this probably has to be done to secure the company - so could only be a good move from a business standpoint.  It does make me wonder what cutbacks will happen on the cruises though.  I am still hoping Aurora survives for a while as we are due on her to Canada/US next Sept.  We are being optimistic and assuming the virus will be under control by then.

Edited July 10, 2020 by tring

[Angel57]

30 minutes ago, molecrochip said:

Today's update from the press release:

• Aida to resume with all extra safety measures on board. Its the test case.
• Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).
• All ships to leave in next 90 days.
• Only five new builds out of eight due by 30/11/21 will be delivered.
• In addition new builds due in 2022/2023 will each be delayed.
• Operating costs reduced by $7bn (per annum equiv.).
• Capital expenditure reduced by $5bn over next 18 months.
• Have secured $10bn+ of additional liquidate with further facilities available. This sustains the company for another full year.
  • Includes $2.8bn raised in June
  • Includes  debt holiday on some new build debt for up to 12 months.
• In addition, company has $8bn of committed credit facilities to fund new build ship deliveries that were originally due through 2023.
• Monthly cash burn is now $650m.
• Cash refunds represent 50% of all refunds/FCC.
• For first three weeks of June, almost 60% of bookings were new. 40% were use of FCC.
• 2021 sales current on historical levels with slight hit on prices once adjusted for FCC etc.
• At end of may, customer deposits were $2.6bn, of which $121m is for Q3 (to Aug 20) and $353 for Q4 (to Nov 30). The rest is mainly FCC.
• Company have repatriated 260,000 guests and 77,000 crew. Crew repatriation continues.

Thanks for posting this info.
Let’s hope none of the extra ships leaving the fleet will be from P&O altho I fear for the future of Aurora and Arcadia.....

[wowzz]

If you want to, you can listen live to the Carnival press briefing, which started at 15:00. 

I think I'll just let molecrochip give us the details!

[cruisenewbie1976]

1 minute ago, wowzz said:

If you want to, you can listen live to the Carnival press briefing, which started at 15:00. 

I think I'll just let molecrochip give us the details!

I've tuned in but it's like listening to my speak and maths (going back to my childhood). I think I'll just read molecrochip's updates. 

[DS_Dean]

Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).

 

I am guessing that perhaps Oceana might fall into the category of deferred delivery dates prior to 1 Dec 2019 which thus allowed her sale to move at such pace.

[Captain_Morgan]

so 13 total across 9 brands....

Oceana and Costa Victoria already gone so that's 2 off the list which leaves 11 more not including those already sent to CMV

 

best guess is the remaining Sun class from Princess will be on the block

Edited July 10, 2020 by Captain_Morgan

[drsel]

Carnival said these agreements are in addition to the sale of four ships, which were announced prior to fiscal 2020.

These ships are presumed to be the Pacific Aria and Pacific Dawn, which will transfer to Cruise & Maritime Voyages, as well as the Costa Atlantica and Costa Mediterranea, which have been sold into a Carnival's joint venture with China State Shipbuilding Corporation. 

I also expect Costa neoromantica to go along with some Carnival cruise line ships manufactured before 2000

[molecrochip]

51 minutes ago, cruisenewbie1976 said:

I've tuned in but it's like listening to my speak and maths (going back to my childhood). I think I'll just read molecrochip's updates. 

I will expand on what was said on the call as it was a lot of interesting stuff.... but I need to put my brain on charge first!

[PrincessPete]

Here is today's stupid question (although it really is not meant to be).

Where will these 13 ships go (or maybe 11 if that figure includes the 2 already destined for CMV next year)?

Surely there is a limited Chinese market where Oriana, and I believe now Oceana, have gone?

To the scrap yard? 

Feels like a very sad day reading this. 

[Jack McGowan]

5 hours ago, joeecco said:

Should we be concerned that Azura seems to be having a lot of time berthed at Southampton when the rest of the fleet is at anchor elsewhere? Does anyone know the particular reason for this .. I’m hoping it’s just in preparation of rescheduling the refit 

I really wouldn’t be too worried about Azura spending time in Southampton, it’s not uncommon ships spending multiple days in port at the moment. 

[Britboys]

I am now slightly worried about Aurora. Hopefully there may be quite a few other smaller, older ships to make up the total quantity. I should think Arcadia is safe as she is younger and has a good ratio of balcony cabins and comparatively few inside cabins.

[Jack McGowan]

Personally quite surprised at how well Carnival are managing to get buyers for these ships. Although I suppose they are being sold for much less that they usually would have been. 
 

Looking at the state of some of the Fantasy class over the last couple of weeks, I wouldn’t be surprised if a good number of those are among those 13. 

[grapau27]

2 hours ago, molecrochip said:

Breaking: Carnival to dump thirteen ships.... more to follow.

Thanks.

As well as the coronavirus and not sailing they also face action again for illegal contaminated waste and oil dumping.

Edited July 10, 2020 by grapau27

[grapau27]

2 hours ago, royallondon said:

Molecrochip, your postings are much appreciated, thank you.

+1 Absolutely agree.

[bee-ess]

4 hours ago, molecrochip said:

Today's update from the press release:

• Aida to resume with all extra safety measures on board. Its the test case.
• Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).
• All ships to leave in next 90 days.
• Only five new builds out of eight due by 30/11/21 will be delivered.
• In addition new builds due in 2022/2023 will each be delayed.
• Operating costs reduced by $7bn (per annum equiv.).
• Capital expenditure reduced by $5bn over next 18 months.
• Have secured $10bn+ of additional liquidate with further facilities available. This sustains the company for another full year.
  • Includes $2.8bn raised in June
  • Includes  debt holiday on some new build debt for up to 12 months.
• In addition, company has $8bn of committed credit facilities to fund new build ship deliveries that were originally due through 2023.
• Monthly cash burn is now $650m.
• Cash refunds represent 50% of all refunds/FCC.
• For first three weeks of June, almost 60% of bookings were new. 40% were use of FCC.
• 2021 sales current on historical levels with slight hit on prices once adjusted for FCC etc.
• At end of may, customer deposits were $2.6bn, of which $121m is for Q3 (to Aug 20) and $353 for Q4 (to Nov 30). The rest is mainly FCC.
• Company have repatriated 260,000 guests and 77,000 crew. Crew repatriation continues.

Thanks for the summary Molecrochip, was anything said about later payment of balances ?

 

[cruisenewbie1976]

3 hours ago, Jack McGowan said:

Personally quite surprised at how well Carnival are managing to get buyers for these ships. Although I suppose they are being sold for much less that they usually would have been. 
 

Looking at the state of some of the Fantasy class over the last couple of weeks, I wouldn’t be surprised if a good number of those are among those 13. 

Dear God, your heart would sink if you turned up for a trip of a lifetime cruise and saw that! 

[PrincessPete]

Indeed, I don't think (Carnival) ECSTASY would have been my emotion on first sight!  

[drsel]

According to CNBC:

 

"Shares of Carnival surged 9.5% after the cruise operator said it is seeing demand for voyages in 2021, with the majority of bookings being new and not from rescheduling, and will restart voyages from Germany in August.

 

The company also said on a conference call that it can be cash flow break even at a capacity between 30% and 50%"

CNBC’s Seema Modi reports

 

 

 

 

[molecrochip]

7 hours ago, molecrochip said:

Today's update from the press release:

• Aida to resume with all extra safety measures on board. Its the test case.
• Thirteen ships to leave fleet (one already gone, has agreements for five, and prelimiary agreements for three more. This is in addition to four sold with deferred delivery dates prior to 1 Dec 2019).
• All ships to leave in next 90 days.
• Only five new builds out of eight due by 30/11/21 will be delivered.
• In addition new builds due in 2022/2023 will each be delayed.
• Operating costs reduced by $7bn (per annum equiv.).
• Capital expenditure reduced by $5bn over next 18 months.
• Have secured $10bn+ of additional liquidate with further facilities available. This sustains the company for another full year.
  • Includes $2.8bn raised in June
  • Includes  debt holiday on some new build debt for up to 12 months.
• In addition, company has $8bn of committed credit facilities to fund new build ship deliveries that were originally due through 2023.
• Monthly cash burn is now $650m.
• Cash refunds represent 50% of all refunds/FCC.
• For first three weeks of June, almost 60% of bookings were new. 40% were use of FCC.
• 2021 sales current on historical levels with slight hit on prices once adjusted for FCC etc.
• At end of may, customer deposits were $2.6bn, of which $121m is for Q3 (to Aug 20) and $353 for Q4 (to Nov 30). The rest is mainly FCC.
• Company have repatriated 260,000 guests and 77,000 crew. Crew repatriation continues.

Further points from call with analysts.

 

Arnold Donald: “We will come back leaner”, “Demand still there”

 

Fleet

• New ship deliveries for 2020 & 21 reshuffled to 2 in 2020, 3 in 2021 and 3 in 2022. 2022  & 23 deliveries will happen but each ship delayed. Delays of 5 months per ship likely.
• All ships will be in warm layup with minimal manning within 30 days.
• Carnival don’t scrap ships – they recycle
• Focus on sale of ships into passenger carrying markets that don’t interfere with strategy.
• Many possible uses for re-use of ships with only a few to be recycled.

Bookings

• Bookings for 2021 are currently 45% new to brand, 55% loyal.
• Costa Asia as usual, last minute booking cycle traditional.
• Bookings in line with historical trends over past decade including Princess.
• Hit to bookings less than in 2012/13 when confidence was dented by incidents affecting company.
• Cruises of over 21 days not booking so well.
• Current average of booking is 45 for Aida/Costa/Carnival

Liquidity

• Currently have $6.7bn of cash and $700m of UK Government Covid-19 loan.
• Currently paying $85m interest on debt.
• 2/3rds of debt arranged this year can be converted to equity at $10 per share – expected to be likely.
• Can survive almost all way to Nov 2021 on no sailings/no revenue.
• Can issue more secured debt if necessary.
• Occupancy of only 30-50% (depending upon ship) needed to ensure positive cashflow.
• Using 2019 actuals, cashflow breakeven is achieved by running biggest 15 ships – top 15 ships generate 31% of cashflow.
• Adjusting for other ships on warm lay-up, need to operate 25 ships generating 40% of cashflow to breakeven.
• 2019 actual figures include marketing (currently almost nil) and shore, general and admin costs which have been reduced significantly.

Restart

• Will not predict when restarting. Will only restart when safe to do so.  Sole priority. 
• Restart expected to be Aida then Costa Europe based upon low incidence of Covid-19
• Over 1,000 bookings in initial day of restart sailings being on-sale.
• Restart may be restricted to specific nationalities. Normally the cruises sail with
  • Aida: 95% German
  • Carnival: 92% American
  • Costa Europe: 80% Continental Europe (mainly Italian/Spanish)
  • P&O: 98% British
  • P&O Australia: 99%+ Australian & New Zealand.
• Ramp up is expected to take 30 days to get first ship in each brand sailing.
• Likely crew quarantine when returning to ship.
• EU guidance is good but each country has own specific requirements.
• Carnival in active public health discussions in Europe/UK. In US, CDC more concerned about remaining crew needing repatriating.
• Less than 50% occupancy needed on restart to generate positive cashflow.
• Will start at less than 50% occupancy and step up from there. Staff and crew must all feel comfortable.
• Many ideas of how to implement social distancing on board focused on all public areas. Inside and outside venues need different approaches.
• A set of cabins retained for infection control / isolation.

Refunds

• Sorry to everyone who has had to wait.
• They have had to address hurdles: unprecedented number of cancellations / staff of sick and all staff moving to working at home.
• Process was previously manual but needed alternative to deal with large number. Used worldwide experience of staff to reprogram systems / new procedures for accurate processing.
• Back to pre-Covid levels of service with couple of exceptions.

Covid

• Corporation had same proportion of cases etc. as other big cruise ship operators.
• Due to collective outbreaks, received disproportionate amount of media attention.

[grapau27]

2 hours ago, cruisenewbie1976 said:

Dear God, your heart would sink if you turned up for a trip of a lifetime cruise and saw that! 

I agree.

It looks like a rust bucket.

[molecrochip]

5 hours ago, Jack McGowan said:

I really wouldn’t be too worried about Azura spending time in Southampton, it’s not uncommon ships spending multiple days in port at the moment. 

It is a surprise given the ship's current movements. There are many non-concerning possibilities such as a) maintenance being undertaken which needs shore support; b) crew being offloaded for repatriation over multiple days; c) Senior crew swap-out and ensuring clear Covid-test pre sailing.

 

Do consider that Azura is due a dry dock. It may be that they are undertaking some of the refurbishment/enhancement work that was due. She would still need her dry dock to cover the MOT/service type work but with reduced crew on board its possible there isnt the crew to oversee refurbishment work - most seem to do fire watch.

 

I've heard nothing suggesting any further P&O or Cunard disposals.