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Cause for cautious optimism?


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Despite the title of this thread, there is NO cause for optimism - cautious or not.

The virus is reigniting around the world and of course surging again in the US

A vaccine is still a dream.

We are not going anywhere for a VERY LONG time.

I laugh when Her cruise line CEOs talk about resuming cruising "safely."  

Even if these cruise lines could survive and make us safe from the virus on the ship (VERY doubtful), who wants to pay tens of the thousands of dollars for a highly restricted experience?

Sorry to burst all your bubbles

My disappointment with this reality is as great as yours but it's not gonna happen.

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  • 2 weeks later...

Covid: Antibodies 'fall rapidly after infection' 

 

 

This is BBC’s newest report of significant findings from the REACT-2 study of COVID-19 antibody tests obtained from more than 350,000 people in England. 

 

COVID-19 vaccines which are nearing approval and release are designed to create protective antibodies. 

Although researchers are working on vaccines which may create protective T-cells and/or B-cells (i.e. the type used for smallpox and yellow fever), none will be available soon.  T-cells and B-cells appear to provide longer term immunity. 

Edited by Jim9310
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B-cells are what make the antibodies.  If you have antibodies, they were made by your B-cells.  (Unless you have a direct therapeutic antibody injection which is not the same as a vaccine.)  Whether or not your B-cells remember the antigen and can gear up more quickly when they see it again is the question.

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46 minutes ago, hubbards said:

Crystal has updated their website with new cancellations for Ocean cruises.  Sad but not unexpected.  My heart breaks for the crew.


same here regarding the crew...it’s so devastating for them.

 

Nancy

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This is some mostly new information and sure there will be outcries  as off topic!

On the same web site noted above there are lists of confirmed ship buildings until 2027.  Endeavor is noted to be ready by April 2021. There are two other ships of same size (19000) and capacity (only 200) , same cost (390 million)   coming in 2022 and 2023 as yet unnamed.  This would bring a total of 3 small expedition luxurious ships into Crystal for those out of my league.   I do not see another Crystal new build holding 800 passengers , 67000 tons  until 2023, with projected first quarter completion . It is unnamed and will be built at cost of 900 million.      During same time, there are 30 more expedition type small vessels being built for a fraction of 390 million a piece.    Closest is a Ponant due for 2021 for 324 million- only one  of the 30 that gets even close  to  300 million.  

Of course none of this may occur due to the ravages of the pandemic.

However, I do not feel Crystal will  be my preference for very much longer.   Good thing the Serenity and Symphony are not being used-a year of wear and tear has been avoided - and  there will be no replacements anytime soon. 

Crystal (Genting) has chosen the path of extreme luxury small ships instead of improving upon their 800-900 passenger

experience. 

https://www.cruiseindustrynews.com/cruise-news/cruise-ship-orderbook.html

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8 hours ago, travelberlin said:

Very interesting article.   One thing I noticed is that all the quotes from Kent Zhu about Genting's intentions were in the past tense.  Which admittedly makes sense, because they may not know what their plans are now.  Although it reads "positive" at first glance, I find no comfort in his use of the past tense referring to Crystal.

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3 hours ago, SusieQft said:

One thing I noticed is that all the quotes from Kent Zhu about Genting's intentions were in the past tense.  Which admittedly makes sense, because they may not know what their plans are now.  Although it reads "positive" at first glance, I find no comfort in his use of the past tense referring to Crystal.

 

I noticed that as well but I figured Kent Zhu could be reflecting about GHK plans for Crystal when they purchased them in 2015, so using past tense would be appropriate. Or maybe something was lost in translation.

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In Germany there are again measures which affect the travel industry in order to stop the sharp increase of COVID cases. Two companies cruising from German ports are TUI and Aida. They inform that they will continue sailing in November. Maybe in US the “no sail order” will be lifted at the end of October. Cruise lines are implementing good measures. Of course those are not for everybody, but if cruise lines cannot cruise with those who are willing to take the risks, it is very hard for all people employed on this industry.

 

https://www.cruiseindustrynews.com/cruise-news/23774-tui-cruises-will-go-ahead-despite-german-lockdown.html

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To sustain optimism, it would be helpful to know whether private investors are going to provide adequate working capital to Crystal Cruises.  Their working capital requirements probably have increased, since more cruises have been cancelled after Cruisemapper’s article was published in August. 

 

 

https://www.cruisemapper.com/news/7852-private-investors-interested-ghk-genting-hong-kong-cruise-brand

GHK-Genting Hong Kong Ltd (Hong Kong China-based holding company that operates cruise, shipbuilding and resort businesses) had received indicative letters from private investors interested in one of its cruise brands (Crystal Cruises?), the company revealed in a filing to the Hong Kong Stock Exchange dated August 28.

GHK (controlled by Chinese-Malaysian billionaire businessman Lim Kok Thay) said there was a reasonable prospect that the group would be able to obtain the funding by June 2021. Genting announced the development when reporting its wider 2020-H1 net loss of USD 687,1 million (Singapore dollars S$934,2M) from USD 55,2M (2019-H1).

GHK added there was "a reasonable prospect" that it would have sufficient working capital and cash flows to fulfill its financial obligations as and when they fall due in the 12 months till June 30, 2021, if it succeeds "in implementing measures and plans including controlling capital expenditure and seeking fresh funding."

 

Edited by Jim9310
wording
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I think Jim is right on about it being helpful to know about private investor interest.  But as a bit of a "scorekeeper", I would also look at what Genting told us in their discussion of the "going concern" issue in their financial report.  The exact quote was,

"In the opinion of the Directors, in light of the above plans and measures, there is a reasonable prospect that the Group will have sufficient working capital to fulfill its financial obligations as and when they fall due in the coming twelve months from 30 June 2020 on the basis of their successful implementation of the plans and measures taken above."

If one looks at the "implementation of the plans and measures taken above" we might get a quick picture of what has changed in the roughly two months since their announcement.  Sixty days is not a long time to do a bunch of complicated deals so maybe this is a bit early to score the effort.  But with no public pronouncements, we can only speculate:

The items outlined to allow things to work until June 30, 2020 (i.e. their game plan) are :

  • Optimization of its capital structure and debt structure and liquidity position by reducing its capital expenditures - no official word on this unless one looks at the sale of Zook which generated about $10 million US as dealing with its capital and debt structure although it is very likely capital expenditures are being reduced.

  • Approval of 'long term funding" from the German Federal Government in September so that the money will flow in October to cover working capital at the shipyards and the ongoing construction of the Group's new cruise ships - They got 193 million euros (sought 571 million euros) for completion of the Endeavor but fell short on the additional money for the Global Dream but hope springs eternal for additional money maybe in March for that ship

  • Deferring the materials supply contracts for Global II and cancelling the materials supply contracts for Endeavor II cruise ships which had been committed reducing those capital commitments - This sort of double counts the non specific first item on reducing capital expenditures but they likely have done something which we know nothing about
  • Positive development of cruise bookings in 2021 with sailings expected to resume in January 2021 - As best I can tell Star Cruises is not sailing an neither is Crystal at least until April.  Dream is now operating two ships I believe but it looks like they are a bit behind target here to a substantial degree.  And even once they start sailing again on Crystal they will be burning of FCCs at a likely high pace as opposed to bringing in new revenue.

  • Additional equity or debt funding with interest being expressed in one of the company's cruise lines - This is the one that excites most Crystal loyalists and the radio silence is frustrating.  But given how this whole covid mess is evolving it would be hard as an investor to figure out what value there might be in a cruise line when there is no clear picture on when sailing will resume and the like.  High risk requires high return so maybe pricing discussions are taking a bit of time to say the least.

  • Loan deferments (apparently not a forgiveness or renegotiation at this point but merely a deferment which delays the day of reckoning) of two loans totaling $182 million US - These have been accomplished.

Recall all of this is about the survival of Genting and not our loved Crystal.  I care about Crystal and not so much about Gentiing unless for some odd reason it has to survive for Crystal to survive and I don't really think that is the case.
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47 minutes ago, H2O Polo Willie said:

Recall all of this is about the survival of Genting and not our loved Crystal.  I care about Crystal and not so much about Gentiing unless for some odd reason it has to survive for Crystal to survive and I don't really think that is the case.

 

So, you have a likely scenario where Genting folds but somehow Crystal survives?  I am really curious what you think that might look like -- as are probably others who read your post.

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19 hours ago, H2O Polo Willie said:

 And even once they start sailing again on Crystal they will be burning of FCCs at a likely high pace as opposed to bringing in new revenue.

 

CRYSTAL'S OUTSTANDING FUTURE CRUISE CREDITS (FCCs)

This unfunded liability has grown substantially since GHK's June financial status report, due to ensuing cruise cancellations.  Cancellations also create more idling and layup expenses.  Consequently, more working capital funds are likely to be required than GHK would have foreseen back in June.

 

 

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On 10/31/2020 at 5:11 PM, FlyerTalker said:

 

So, you have a likely scenario where Genting folds but somehow Crystal survives?  I am really curious what you think that might look like -- as are probably others who read your post.

 

That is certainly a fair question and the answer to it requires immense speculation as we don't have things that would allow us to even make a good educated guess like Crystal's independent financials and a chart showing Genting's corporate structure.  But what the heck.  While we are shoreside this can be as good a parlor game as any other.

 

Let's start with some things we can probably understand (not the use of "probably" and take that and apply this throughout as
Genting is less than transparent to say the least).  Genting is Hong Kong based and is Asian focused.  To simplify, one can basically break their operation into a couple of segments - cruises and the shipyard.  While there are other things like the partial ownership of Grand Banks (26.9%) and Resort World Manila (30%) most of their game is being played in the other two segments (see attached graphic thanks to a previous post from Jim9310).

 

To survive, Genting needs to start generating income to cover its operating costs.  And it is doing so and it is focused on the operations that can get going.  They appear to have the "connections" to get going in Asia.  They have just put the second Dream ship into operation and Asia is opening up much faster than traditional Crystal itinerary stops.  So Dream might be moving closer to break even if not making a small profit.  And Star is not sailing as best I can tell but it is likely made some money from the Singapore government as they are used two of the Star ships as potential quarantine locations in the harbor.  The shipyard is another story having just got a "working capital" grant from the German government so they have cash to continue work at least on the Endeavor.  So some of the operations are at least bringing in some cash.  One isn't - Crystal.  So, I guess the question I come up with is kind of the reverse of yours - for Genting to survive does Crystal have to survive?

 

So if you were sitting in the CEO chair at Genting, what do you do with Crystal?  It's itineraries are much more far flung than Dream's so for to begin operations you need to count on many more international ports opening up or you need to reconfigure where it sails - LA to Mexico or Miami to the Caribbean for example.  The former is pretty iffy at this stage and the latter is not exactly what most Crystal customers have been interested in.  So Crystal poses a lot more problems than does Dream for example in terms of getting going and every day it is losing money with layup costs and the like (refunds for example?). So, Crystal is a cash drain on the overall operation.  Do you use the money that his being generated from the re-energized Dream and shipyard operations to continue to subsidize and pay Crystal's bills or do you try and cut your losses like they did with the sale of Zook?

 

Crystal remains a California LLC so it could be sold off just as when it was purchased.  And it likely has its own internal financials just as we saw with Zook which were revealed in tiny part when it was sold off.  But each day, I suspect that the internal financials for Crystal deteriorate with cash drains which likely decreases its value if the uncertainty factor isn't bad enough.  But Crystal Cruises LLC certainly has value to some investor and I would speculate that the best way for Genting to realize that is to sell it which would give it new life and a viable future.  The purchaser could do what they want with the operation.  Would they continue to sail just the river ships or maybe sell them to another line that has older vessels that wants to update its ships?  Would they sell the airplane?  Would they continue to operate Crystal exactly as it has been operated in the past?  The list of unknowns is lengthy and as one person once noted there are the "unknown unknowns"  That is why this speculation is such a great parlor game.

 

Sorry for the length of this post but this is quite and interesting situation.

 

Genting graphic.docx

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20 hours ago, Jim9310 said:

 

CRYSTAL'S OUTSTANDING FUTURE CRUISE CREDITS (FCCs)

This unfunded liability has grown substantially since GHK's June financial status report, due to ensuing cruise cancellations.  Cancellations also create more idling and layup expenses.  Consequently, more working capital funds are likely to be required than GHK would have foreseen back in June.

 

 

 

I did see one of the Utube guys raise this issue.  His view was that the major cruise lines were seeing 50% or the people taking refunds and the other 50% taking FCCs.  His point was that when ships started sailing again they would sail at limited capacity - he suggested 35 or 40% which seems low to me.  But to make the analysis easy if one assumes 50% FCCs and 50% capacity with a year of cruises cancelled, his point was that the cruise lines are still going to be burning cash.  I am not sure the analysis holds but it is an interesting thing to think about.

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Here are a couple of highly relevant articles about investment opportunities sought by Canadian pension plans.  The  articles provide helpful insights into the kinds of passive investment deals which might suitably fit Crystal’s situation. 

 

Top Canada Pension Fund Hunts for Deals In  ‘Cheap’ Travel Sector (Oct 2020)

https://finance.yahoo.com/news/top-canada-pension-fund-hunts-210200925.html

 

TPG and Ontario Teachers’ Pension Plan’s Acquisition Of 35% Of Dream Cruises (Aug 2019)

https://www.globallegalchronicle.com/tpg-and-ontario-teachers-pension-plans-acquisition-of-35-of-dream-cruises/

Edited by Jim9310
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On 10/17/2020 at 7:03 PM, bitob said:

Despite the title of this thread, there is NO cause for optimism - cautious or not.

The virus is reigniting around the world and of course surging again in the US

A vaccine is still a dream.

We are not going anywhere for a VERY LONG time.

I laugh when Her cruise line CEOs talk about resuming cruising "safely."  

Even if these cruise lines could survive and make us safe from the virus on the ship (VERY doubtful), who wants to pay tens of the thousands of dollars for a highly restricted experience?

Sorry to burst all your bubbles

My disappointment with this reality is as great as yours but it's not gonna happen.

Hi bitob I think I have replied to another post from you but I'm reading this again today as the UK is going into a total lockdown from midnight GMT tonite for the month of November... I'm with you and had posted way way back that's it's going to be a long time before the cruise experience we have all enjoyed is a long way off.. you've not burst my bubble bitob it was burst a long time ago😢 as you say it's reality..the king is dead long live the king( UK quote ...) 😉

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2 hours ago, Lvshack said:

Hi bitob I think I have replied to another post from you but I'm reading this again today as the UK is going into a total lockdown from midnight GMT tonite for the month of November...

 

Wonder if you heard/read how Maajid Nawaz ripped into one the the prime advisors of the new lockdown at Independent SAGE. 

 

https://www.zerohedge.com/political/radio-host-crushes-leading-british-epidemiologists-credibility-over-unknown-cost-2nd

 

 

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2 hours ago, FlyerTalker said:

 

Wonder if you heard/read how Maajid Nawaz ripped into one the the prime advisors of the new lockdown at Independent SAGE. 

 

https://www.zerohedge.com/political/radio-host-crushes-leading-british-epidemiologists-credibility-over-unknown-cost-2nd

 

 

Oh now you're getting to deep for me !!! Flyertalker... I've not read or heard anything I'm sorry !!! My contributions to the topic was really about future crusing.. I'm as tonight in lockdown ( again) although my haematology appointment next week is still going to plan( I have myeloma..)  I don't know where your from ..UK????🤔

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The world is in lockdown ---  whether each individual government orders it or not.

 

Let's face it -- there is no possibility of cruising safely (and enjoyably) until perhaps 3rd quarter of 2021.

I am not a doctor.  I do not need to be to see and understand what is happening in the world.  Things are getting worse, not better.

 

We are terribly disappointed.  We miss cruising.  We miss traveling.   We hate staying home.  We miss seeing our friends.  We are bored and tired of this pandemic.  There is nothing left to binge watch.  This is is not the retirement we envisioned.

 

But we understand that lives are at risk (ours and everyone else's) and we know we are not going anywhere for a while.

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4 hours ago, bitob said:

The world is in lockdown ---  whether each individual government orders it or not.

 

Let's face it -- there is no possibility of cruising safely (and enjoyably) until perhaps 3rd quarter of 2021.

I am not a doctor.  I do not need to be to see and understand what is happening in the world.  Things are getting worse, not better.

 

We are terribly disappointed.  We miss cruising.  We miss traveling.   We hate staying home.  We miss seeing our friends.  We are bored and tired of this pandemic.  There is nothing left to binge watch.  This is is not the retirement we envisioned.

 

But we understand that lives are at risk (ours and everyone else's) and we know we are not going anywhere for a while.

I totally respect your opinion but I disagree.  I live in Texas and we don’t feel like we are in “lockdown.”  We traveled for three months across the western US this summer and with the exception of California, we never really felt that we were in a lockdown at all.  There are hotspots in Texas for sure but the death rate is going down as therapeutics are developed.
 

We have had several friends that have had the virus but in all cases it was very mild and they all recovered within a few days.  I believe that approximately 98% of the people that get the virus recover and 97% of the population has not been infected.  
 

I realize life is not “normal” and until a proven vaccine is widely distributed and the infection rate declines we will have to continue to be vigilant.  We follow all of the recommended cdc guidelines and encourage others to also comply but we refuse to allow a virus to destroy our retirement activities. 
 

We will cruise again, hopefully in the spring!!

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For now Crystal and likely other cruise lines will aim to cruise in the second quarter of 2021.  It's anyone's guess what things will be like by then.  Right now we are in the dark period not only in the USA but may places in Europe are in lock down or possibly getting there.  Whether or not Americans will be welcome in various countries will depend on how we are doing at the time and if we are welcome whether or not cruises will take place will depend on many factors including what the virus situation is like in the counties on the itinerary and whether or not there are quarantines for those arriving to the respective countries.  

 

As to a vaccine at least in the USA it probably would not be well distributed until the middle of 2021.  And we still don't know how effective it will be.  

 

I do think how you feel isn't just based on where you live.  It depends on your own personal views and other factors such as your health situation.

 

For example, we also live in Texas.  I've never felt we were in a lockdown even when many businesswear were shut down.  However, I follow what some of the scientists say so I have no interest in going on road trips, flying anywhere, going to indoor restaurants or getting together with others for the upcoming holidays.  I would rather be cautious so hopefully we have many future years to enjoy the things we love doing and in "our situation" do not want to take unnecessary risks.

 

I think it is important that Crystal has a goal as to when they will start up again. I hope they achieve it.

 

In our case, we have booked and hope to cruise with Crystal in the third quarter but we realize there are many unknowns but hopefully we will know a lot better by early next year particularly with respect to the vaccine and its effectiveness.  

 

Keith

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