What Is The Current Financial State of the Cruise Lines?

[gerryuk]

Does anybody know what the current financial state of the cruise lines is today? I am particularly interested in how Carnival is doing, but wont mind knowing how the others are doing. I remember from reading on these forums many months ago, that all the main players were raising billions to keep afloat. Now this seems to be never ending, i know i am asking "how long is a piece of string" here, but how much longer can these line survive?

I am particularly interested in Carnival as i have 3 cruises booked with their subsidiary line Costa, all of which was via FCC for previous cancelled cruises.

Now the Costa website (all worldwide versions) has been down for 2 months, you cannot login, you cannot sign in to My Costa to get your cruise details, you cannot book future cruises with them, others who have booked cruises with them are saying that they are not answering emails or telephone calls. The initial reason given for their website being down was "IT problems", well most websites have IT problems but are back online within hours or days at the most, but 2 months and counting?, something does not seem right here. Costa announced a couple of weeks ago that they will resume cruises in March but no one can book them, even the Italian site has been down for months. How worried should we be with the current situation? 

 

[DirtyDawg]

Hi,

Just search the internet for Carnival Corp. 10K and you will find the latest annual report for the company. It was issued in late January and has financial details as of their fiscal year end which was Nov. 30th, 2020. 

Lots of good operational and financial information and it fairly light reading at only 138 pages long. 😉

The good news is they had over $9 Billion in cash at Nov 30th. The bad news is last year they used over 6 Billion in cash in their operations which means they spent $6 billion of cash more than they generated in cash. Doing that again this year would put a big dent in their bank accounts!

Will that happen? Sorry, I left my crystal ball at the office and I haven't been back there in over 10 months. 

 

As for your Costa cruises, if I were you I'd get my cash back and wait until next year to think about cruising again. The cash is better off in my bank account than some corporation's bank account.

 

[clo]

29 minutes ago, DirtyDawg said:

As for your Costa cruises, if I were you I'd get my cash back and wait until next year to think about cruising again. The cash is better off in my bank account than some corporation's bank account.

 

Agreed. And it's usually pretty easy to find email addresses of CEOs and the like. And while they're unlikely to actually see it it does get you up the ladder.

[CruiserBruce]

On the Holland America board in mid January, the corporate report was Carnival Corp has enough cash to last through 202, and has the possibility of raising more cash after that.

[SelectSys]

1 hour ago, gerryuk said:

Now the Costa website (all worldwide versions) has been down for 2 months, you cannot login, you cannot sign in to My Costa to get your cruise details, you cannot book future cruises with them, others who have booked cruises with them are saying that they are not answering emails or telephone calls.

 

Not sure, the page just loaded for me.  Maybe you need to clear your browser cache?

33 minutes ago, DirtyDawg said:

As for your Costa cruises, if I were you I'd get my cash back and wait until next year to think about cruising again. The cash is better off in my bank account than some corporation's bank account.

 

That's my perspective too!

[gerryuk]

23 minutes ago, SelectSys said:

 

Not sure, the page just loaded for me.  Maybe you need to clear your browser cache?

 

 

Yes the page loads but you cannot sign in, book cruises or do anything with their site, its been like that for a couple of months, Its the same with their Italian site. 

[gerryuk]

23 minutes ago, gerryuk said:

Yes the page loads but you cannot sign in, book cruises or do anything with their site, its been like that for a couple of months, Its the same with their Italian site. 

And here is a link to the Costa board i started back in December, its not my computer.

Costa internet site - Costa Cruises - Cruise Critic Community

[JRG]

On 2/12/2021 at 12:59 PM, DirtyDawg said:

Lots of good operational and financial information and it fairly light reading at only 138 pages long. 😉

The good news is they had over $9 Billion in cash at Nov 30th. The bad news is last year they used over 6 Billion in cash in their operations which means they spent $6 billion of cash more than they generated in cash. Doing that again this year would put a big dent in their bank accounts!

Will that happen? Sorry, I left my crystal ball at the office and I haven't been back there in over 10 months. 

 

I believe their CEO gave us CCL's key balance sheet accounts in his interview to do the quick ratio analysis and look at the solvency.   I quickly saw 1 year before they need to seriously retrench further.   This would be because the operating results broadly reflect the ramp down costs (as an extraordinary item) thru end of last year, and their cash burn rate is slower now but still perilous in an industry that is still under duress.

 

The first quarter operating results would provide a better pro-forma look at this 2021 year,  so I'd have to wait and look again at the key balance sheet accounts with ratio analysis and AR (analytical review) at the time for a better guess.

 

I haven't been back in the office for 10 years but I can still read an annual report and assess a qualified or unqualified opinion.  

 

Inside the bubble of the pandemic,  which I never lose sight of,  being able to practice real-life financial analysis is enjoyable.   It's not hard.   

 

I think we'll have a clearer picture of long-term solvency and ongoing concern 'sustainability' when they release Q1 results.   You could theoretically perform the same ratio analysis yourself with RCG and NCL and compare to see who you thing is surviving.

 

I would never waste my time doing that (unless I was paid) ,  but if anybody is interested that is what the stock analyst does for a snapshot.

Edited February 13, 2021 by JRG

[DirtyDawg]

46 minutes ago, JRG said:

I think we'll have a clearer picture of long-term solvency and ongoing concern 'sustainability' when they release Q1 results.   You could theoretically perform the same ratio analysis yourself with RCG and NCL and compare to see who you thing is surviving.

 

I would never waste my time doing that (unless I was paid) ,  but if anybody is interested that is what the stock analyst does for a snapshot.

 

I would also not waste my time doing that unless I was getting paid for it or was inclined to invest in a cruise line for the long term. (same as getting paid for it, I guess 😉)

 

I must admit I bought RCL stock last year but that wasn't investing by any stretch of the imagination. Pure speculation. It turned out to be profitable speculation but playing roulette in Vegas would have been way more fun. 😁

[gerryuk]

Thanks for that JRG.

I just find it strange that a multi billion dollar company like Carnival would allow its subsidiary Costa to basically go dead. Its website has been down since November, They are not answering calls or emails and you cannot book cruises with them. Many are complaining on their Facebook page about this and many, seem to be still waiting for refunds since the beginning of this pandemic. Their initial excuse was that they were having IT problems, but IT problems since November, does not sound plausible now we heading into mid February. Nice to know Carnival Corp have money in the bank, if only they could send some to Costa in Italy so they can set up a customer service department, they clearly don't have one at the moment.

[JRG]

54 minutes ago, DirtyDawg said:

I would also not waste my time doing that unless I was getting paid for it or was inclined to invest in a cruise line for the long term. (same as getting paid for it, I guess 😉)

 

Can you spell SPAK? 

 

edited to say.   I meant SPAC.

 

Special Purpose Acquisition Company

Edited February 14, 2021 by JRG

[JRG]

35 minutes ago, gerryuk said:

Thanks for that JRG.

I just find it strange that a multi billion dollar company like Carnival would allow its subsidiary Costa to basically go dead. Its website has been down since November,......

 

If CCL (or the other lines) have to re-trench further,  and if they are close to bare-bone staffing levels,  then they would have no other cost-cutting options other than to scrap ships and hold the line for another year and make the same round of assessments.  

 

My point is that watching what the Cruiselines do with their ship inventory might be the best barometer for gauging their health.    We've refunded all but 1 cruise because we found the replacement choices are just not the same cruises we originally bargained for.

 

 

 

 

 

 

Edited February 14, 2021 by JRG

[Hlitner]

A few of us have been discussing this financial issue in other threads and since CCL, RCI and Norwegian Holdings are public companies it is relatively easy to find financial info...although there is always some lag in what is published vs the current situation.   I think that things will start getting a lot more difficult (financially) if those three companies cannot get some operations commenced by the third quarter with a gradual increase in operations over the following few months.   If these 3 companies continue to be stymied for the remainder of 2021 I fear they will dig themselves into a debt hole from which recovery will be difficult.    MSC, on the other hand, has the huge advantage of being part of a large container shipping empire which continues to provide revenue.  I feel much more optimistic about their long term survival intact.

 

Hank

[clo]

Try this.

 

https://www.elliott.org/company-contacts/carnival-cruise-lines/

[BoozinCroozin]

You can only go by what they are telling you and required by the SEC. However, reading between the lines and limited information, it is far more dire than they are stating IMO. CCL is seeking another $600M. They would not be doing that unless there were cashflow problems. I do believe the cruise lines are being as open as they can in a very grey area required by the SEC. If they were being 100% honest, they would state in this week's earnings reports, that cruising is not happening in the US for a long time. They need to state that the CDC is providing no direct and achievable guidance. The pressure needs to be put back on the government to force a set of requirements that need to be met.

[VMax1700]

Perhaps the current 'state of emergency' in Italy is not helping.  Many IT problems can be fixed remotely, but if it is a server or mainframe problem then access may be difficult in the current Italian political/virus situation.

[JRG]

7 hours ago, BoozinCroozin said:

However, reading between the lines and limited information, it is far more dire than they are stating IMO. CCL is seeking another $600M. They would not be doing that unless there were cashflow problems. I do believe the cruise lines are being as open as they can in a very grey area required by the SEC. If they were being 100% honest, they would state in this week's earnings reports, that cruising is not happening in the US for a long time.

 

I think you have a very keen insight here.  I was apprehensive about posting my thought that...

 

If they (CDC) really thought that cruising was finished,  their obligation under transparency would be to signal cruiselines to start the fire sale, don't suffer the stakeholders needlessly. 

 

 If they (CDC) think there is a chance for cruising to resume then they would be doing what they are doing right now.

 

It would be similar to the FDA determining that a product is hazardous to the public and issuing the cease and desist.   They would not stretch it out,  albeit for health and safety purposes more than the stakeholder interest.

 

 

 

 

 

 

[iancal]

Doubtful that one cruise will leave the dock before the end of the year.  Limited start up and only partial customer loads for at least 3 months, perhaps more. Higher costs to meet health regulations.

 

Debt is accumulating.  Common stock has already been diluted.   The convertible bond issue may mean more, significant dilution of common shares (for CCL).  More debt will probably be required on start up.

 

It all points to poor cash flow, much lower shareholder equity, significantly lower EPS on startup and for the short term after operations commence.

 

Not to mention competition from the smaller lines, more agile cruise lines who have purchased ships at fire sale prices and will have much better balance sheets.

 

But, who is to say the industry or the industry subsidiary cruise lines will remain as they are at the current time.   Lots of time still for ship dispositions, cruise line amalgamations, whatever.    

 

I have little doubt that the lawyers, the accountants, the ops folks,  the execs, the M&A folks, etc are busy working and evaluating  multiple options.

Edited February 14, 2021 by iancal

[LocoLoco1]

Berenberg Bank (Old line merchant bank) just downgraded CCL, so sez their Analyst Stuart Gordon. . HOWEVER, don’t read too much into that; ie either your Cruiseline will get you the cruise you paid for or they won’t.  IF Carnival goes into ‘administration’ bankruptcy, all bets are off as to whether monies you paid will be returned to you. Q: Did you pay with a Credit Card? Use a licensed Travel Agent?  ALL cruiselines are financially strapped right now..Good luck. 

[Roger88]

I am sure they are doing just fine. Year they are losing tons of money right now but these companies made billions of dollars in the past decade so I doubt a loss of one billion will really hit the industry in general. Its too well demanded 

[clo]

39 minutes ago, Roger88 said:

so I doubt a loss of one billion will really hit the industry in general.

How about Carnival specifically losing $10 BILLION last year?

 

https://fortune.com/2021/01/11/carnival-cruises-covid-19-losses-q4-earnings/

 

Curious where you got the "one billion" idea?

[iancal]

It would not surprise me to see another spinoff/subsidiary  cruise line sale similar to Azamara.

[ontheweb]

38 minutes ago, clo said:

How about Carnival specifically losing $10 BILLION last year?

 

https://fortune.com/2021/01/11/carnival-cruises-covid-19-losses-q4-earnings/

 

Curious where you got the "one billion" idea?

I think he confuses per month with per year.

[clo]

58 minutes ago, ontheweb said:

I think he confuses per month with per year.

Many years ago my husband was called for jury duty. Seems like it was a personal injury case. He had no doubt that he was touted to be the chair of the duty because of his degree in accounting and MBA. He could explain the math to others 🙂

[njhorseman]

2 hours ago, ontheweb said:

I think he confuses per month with per year.

It's not that benign a reason.