Carnival to Dump Six Ships

[Goosebear Mum]

To me Azura being sold wouldn’t be a surprise. P&O now only have two smaller ships, both of which are popular and sell cabins at a premium price. Iona is coming on the scene, and with Iona’s sister in 2022 (now later?) and in addition there are Britannia, Ventura and Azura to all fill. Azura and Ventura are the ‘odd ones out to me’. Ventura always seems more popular, and so I wonder if Azura will be the next to ‘leave’... nothing but gut feel here. Total speculation and probably all wrong! 

[ann141]

18 minutes ago, molecrochip said:

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.

Do you know which ship P and O are most likely to 'test' first and any estimate when Iona is likely to be delivered and start cruising if considered safe to cruise again?Also do you know if P and O may extend the balance due date for October cruises

[Jack McGowan]

Just now, Goosebear Mum said:

To me Azura being sold wouldn’t be a surprise. P&O now only have two smaller ships, both of which are popular and sell cabins at a premium price. Iona is coming on the scene, and with Iona’s sister in 2022 (now later?) and in addition there are Britannia, Ventura and Azura to all fill. Azura and Ventura are the ‘odd ones out to me’. Ventura always seems more popular, and so I wonder if Azura will be the next to ‘leave’... nothing but gut feel here. Total speculation and probably all wrong! 

Azura is the newest grand class ship so I’d say she’s the least likely to go, if anything she would transfer over to Princess and one of there older pre 2000 grand class ships would get sold. Still, I definitely think Arcadia & Aurora would be on the agenda for P&O before Ventura and Azura were even thought about. 

[DS_Dean]

Agreed. I think Aurora and Arcadia will be next and then Azura and Ventura will be P&O's new small ships. But I don't think this will be soon.

 

It seems like the larger the ship the more economical it is to run. Would be interesting to know if the numbers were crunched the costs of running P&O's ships and occupancy rate to break even. It seems like the bigger ships are most economical so don't feel like Grand class Azura/Ventura are at any risk. 

 

More likely the remaining Sun class ships will go in Princess, effectively 'Sun' setting that class, based on the numbers on a spreadsheet which indicate lower viability of this class of ship post covid.

 

I don't think any more P&O ships will leave in Carnival's 13 ship count. In my mind Oceana got an accelerated exit but I am pretty sure from reading all the posts and material that there was already done provisional plan for Oceana exit ready for Gala 2 and thus certain things came into alignment easier for speedy sale. I don't think Aurora or Arcadia are in this same position.

Edited July 10, 2020 by DS_Dean

[terrierjohn]

4 minutes ago, Jack McGowan said:

Azura is the newest grand class ship so I’d say she’s the least likely to go, if anything she would transfer over to Princess and one of there older pre 2000 grand class ships would get sold. Still, I definitely think Arcadia & Aurora would be on the agenda for P&O before Ventura and Azura were even thought about. 

Having read Moley's post about Arnold Donalds video conference, it's clear the bigger ships are far more profiable, and generate a higher cash flow. So despite Aurora and Arcadia selling at higher prices, they will be well down the pecking order, and will need to run at much higher occupancy levels jut to match an Azura's performance.  

It does not bode well for the tiny tots.

[molecrochip]

2 minutes ago, Jack McGowan said:

Azura is the newest grand class ship so I’d say she’s the least likely to go, if anything she would transfer over to Princess and one of there older pre 2000 grand class ships would get sold. Still, I definitely think Arcadia & Aurora would be on the agenda for P&O before Ventura and Azura were even thought about. 

I agree. I would also expect them to transfer internally rather than sell.

4 minutes ago, ann141 said:

Do you know which ship P and O are most likely to 'test' first and any estimate when Iona is likely to be delivered and start cruising if considered safe to cruise again?Also do you know if P and O may extend the balance due date for October cruises

I'm expecting the Transatlantics to happen first. Maybe a Ventura cruise around the UK. I dont expect it to be Arcadia or Aurora first as its easier to social distance on big ships.

 

Iona delivery - August / September. Arnold Donald was talking five month delays. I don't expect Iona to be the first ship in service. Too risky PR wise. I don't expect her maiden to be in October.

 

Please note that cruises are currently cancelled to and including 15 October. P&O have not said they are restarting on 16 October. Semantics maybe. I've also heard conflicting reports regarding payment due dates and don't have a definitive answer. Should point out that, generally, if you've booked with a Travel Agent, you have a contract with them regarding your payment due date not P&O. This is how they enforce the month earlier required for payment.

[molecrochip]

Having crunched the numbers, there were due to be 8 deliveries over 2020/2021 excluding Seabourn. Arnold Donald said this would now be 2020: 2, 2021: 3. He then stated total deliveries in 2022 will be 3. That makes 8.

 

Whilst not explicitly stated, that suggests that no ships originally scheduled for 2022 will be delivered before 2023. That would mean delays to the new Cunard ship and Gala2.

[DS_Dean]

Agree with those sentiments. They won't risk Iona having any more bad PR. Britannia is the current flagship so they may be guarded about her too. Arcadia and Aurora have no chance as smaller ships.

 

It looks like it's going to be Azura and Ventura starting up first, if I was betting. They are a suitable size and bad PR could be easier managed in case of major problems. Neither Azura or Ventura carry same brand weight as Brittania and Iona. Perhaps Azura's regular Southampton trips are preparing her to re-enter first.

Edited July 10, 2020 by DS_Dean

[molecrochip]

5 minutes ago, DS_Dean said:

Agree with those sentiments. They won't risk Iona having any more bad PR. Britannia is the current flagship so they may be guarded about her too. Arcadia and Aurora have no chance as smaller ships.

 

It looks like it's going to be Azura and Ventura starting up first, if I was betting. They are a suitable size and bad PR could be easier managed in case of major problems. Neither Azura or Ventura carry same brand weight as Brittania and Iona. Perhaps Azura's regular Southampton trips are preparing her to re-enter first.

I wondered this last point myself. Carnvial UK have a team planning for re-start. I wonder if the are inspecting Azura and trying things such as perspex screens / different restaurant layouts.

[wowzz]

2 hours ago, drsel said:

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

Without repeating what I wrote on a different forum, this seems like marginal costing to me. Yes, they can cover cash flow, but eventually they will go bust!

I guess that is why there is such a push to get the newer, bigger ships into service, as even at lower capacity levels they will make an actual profit, as compared to the older, smaller ships. 

[joeecco]

7 minutes ago, DS_Dean said:

Perhaps Azura's regular Southampton trips are preparing her to re-enter first.

this is a very sensible thought. Maybe this goes further in that senior management are on and off testing and trialing possible new rules and procedures. Also agree that they’re preparing her for her dry dock, our wedding is booked onboard her for July. I can’t even begin to imagine if she was sold.

 

i know some people will can say ‘you can rebook or rearrange’ and that is true but that doesn’t make it any easier to deal with. Nobody books a wedding with the attitude of ‘if it gets cancelled oh well’ aha 

[DS_Dean]

It sure seems like it would make sense. Regular Southampton trips may also allow for people from governing bodies to embark and observe the proposed revised layouts. 

[winman14]

1 minute ago, molecrochip said:

I wondered this last point myself. Carnvial UK have a team planning for re-start. I wonder if the are inspecting Azura and trying things such as perspex screens / different restaurant layouts.

 

Wouldn't this also seem viable looking towards Princess and there Grand class ships and how they would be able to adopt methods in order to restart too? 

[Jack McGowan]

Do we think the Azura & Britannia fly cruises are actually likely to take place this year?

[molecrochip]

1 minute ago, Jack McGowan said:

Do we think the Azura & Britannia fly cruises are actually likely to take place this year?

The Caribbean islands need the tourism cash. Protcols are in place for flying now and Barbados is in the air-bridge.

 

I honestly think that the push is there to make it happen if everything continues on the current improving trajectory.

[wowzz]

We on here are relatively well informed,  thanks to the likes of molecrochip ( my spell check hates your name!)

However, in the real world, the uninformed think cruising will start up again on October 16th, with every ship suddenly leaving port.  They have no conception of social distancing rules and how they relate to cruising,  and they certainly have no idea that every cruise, if and when it sails, will at best be at 75% or so capacity. 

My point is that many people seem quite happy to still believe that cruising will still go ahead later this year,  but they have no conception as to the realities of the new cruising practicalities.

[molecrochip]

I know that Queen Elizabeth is not a P&O ship however surprised she is being brought back to the UK. She was in Australia and her next cruise on 25 November is in Australia. I think this suggests that her future voyages may be at risk of change.

 

There is definitely a redistribution of capacity going on focused on ships cruising in home markets rather than around the world.

[tring]

51 minutes ago, molecrochip said:

I agree. I would also expect them to transfer internally rather than sell.

 

 

If Azura, or perhaps Ventura does go to Princess, for instance, perhaps that could be a way of disposing of a certain name and the name Diamond comes to mind.  Does not appear to be the oldest of the class, but gets rid of a lot of publicity which would be better buried.  Or could transfer to another cruise line and hence given a new name.

Edited July 10, 2020 by tring

[No pager thank you]

Just a thought:

 

The greater clarity around the deferral of Gala 2, plus knowledge across the Corp around which thirteen ships are for "recycling" probably also means that we are not too far away from a 2022/23 brochure launch?

 

Essentially, unless the situation is misread, 2022/23 would be conceived around the remaining ships in the P&O fleet, plus Iona, minus Gala 2.  A Gala 2 brochure could launch separately to garner interest some stage next year.

 

If the levels of new bookings are strong, then this would seem an obvious way to draw in new bookings to the business.  Plus give greater flexibility to passengers affected by the phasing of any restart, when it happens.

[Jack McGowan]

Just now, molecrochip said:

I know that Queen Elizabeth is not a P&O ship however surprised she is being brought back to the UK. She was in Australia and her next cruise on 25 November is in Australia. I think this suggests that her future voyages may be at risk of change.

 

There is definitely a redistribution of capacity going on focused on ships cruising in home markets rather than around the world.

I thought this was a bit strange too, surely they aren’t just bringing her back for layup? I can’t see Australia wanting ships for a while though if I’m honest so wouldn’t be surprised if they are planning on doing some cruises from Southampton with Elizabeth. What do you think they might do?

[wowzz]

2 minutes ago, molecrochip said:

I know that Queen Elizabeth is not a P&O ship however surprised she is being brought back to the UK. She was in Australia and her next cruise on 25 November is in Australia. I think this suggests that her future voyages may be at risk of change.

 

There is definitely a redistribution of capacity going on focused on ships cruising in home markets rather than around the world.

Which suggests that Round the World cruises are a thing of the past, certainly for the next few years 

[Jack McGowan]

3 minutes ago, No pager thank you said:

Just a thought:

 

The greater clarity around the deferral of Gala 2, plus knowledge across the Corp around which thirteen ships are for "recycling" probably also means that we are not too far away from a 2022/23 brochure launch?

 

Essentially, unless the situation is misread, 2022/23 would be conceived around the remaining ships in the P&O fleet, plus Iona, minus Gala 2.  A Gala 2 brochure could launch separately to garner interest some stage next year.

 

If the levels of new bookings are strong, then this would seem an obvious way to draw in new bookings to the business.  Plus give greater flexibility to passengers affected by the phasing of any restart, when it happens.

I wouldn’t be surprised if we see a major shake up of where ships are deployed for certain cruise lines. Princess have already amended their Europe and Alaska seasons for 2021, surprisingly in favour of the UK with Regal coming to Southampton in place of Grand Princess

Edited July 10, 2020 by Jack McGowan

[winman14]

3 minutes ago, Jack McGowan said:

I wouldn’t be surprised if we see a major shake up of where ships are deployed for certain cruise lines. Princess have already amended their Europe and Alaska seasons for 2021, surprisingly in favour of the UK with Regal coming to Southampton in place of Grand Princess

 

Maybe so they can run with more passengers on a reduced capacity Regal than they would have been able to with Grand? Especially only having one Princess ship run out of Southampton. 

[No pager thank you]

3 minutes ago, Jack McGowan said:

I wouldn’t be surprised if we see a major shake up of where ships are deployed for certain cruise lines. Princess have already amended their Europe and Alaska seasons for 2021, surprisingly in favour of the UK with Regal coming to Southampton in place of Grand Princess

Yes, the numbers appear to indicate that, in an international context, the underlying British cruise market is stronger; but is set against a worse Covid-19 backdrop and public health stance than some of Europe. 

 

This would suggest that British cruising may start later, but flourish quicker, hence the relative movement of capacity to this market.

[Jack McGowan]

2 minutes ago, winman14 said:

 

Maybe so they can run with more passengers on a reduced capacity Regal than they would have been able to with Grand? Especially only having one Princess ship run out of Southampton. 

Maybe, but they have another grand class ship doing British isles cruises and also island princess out of Southampton next year so quite high passenger numbers.