Will the 2022 Recession affect CCL cruise fares?

[tidecat]

30 minutes ago, jetsfan58 said:

That point is certainly well taken. The stockholder value equation will always rule the decision. The stockholders are also human and know the value of "idle time." They are gong to advise the Carnival Leadership Team to keep those vessels moving regardless of the probabilities of success/failure.

 

It's a hard choice but at that level only "cash and green" matter. We can all help by masking up when necessary and following the prescribed rules.    

Most modern cruise ships cost around $1 million per month to operate, even without passengers - we'll see ships sold for scrap rather than put into a long-term layup.

[BlerkOne]

On 7/29/2022 at 6:47 AM, bamaone said:

One of the biggest issues with the green thinkers is that they don't actually think. They have no idea how many things depend on fossil fuels (petroleum) that we use in our everyday lives.

At least as big of a problem is the oil wasted, particularly by Americans who overconsume like there is no tomorrow. Whether it is gas guzzler vehicles or leaving lights and heat/ac on when no one is home.

Filling landfills with disposable plastics and diapers.

 

When the price of oil goes up, it takes Americans a while, but eventually consumption goes down. Funny how they don't really have to waste so much.

 

[BlerkOne]

53 minutes ago, jetsfan58 said:

That point is certainly well taken. The stockholder value equation will always rule the decision. The stockholders are also human and know the value of "idle time." They are gong to advise the Carnival Leadership Team to keep those vessels moving regardless of the probabilities of success/failure.

 

 

Most of the stock is held by institutions.

[Purvis1231]

Royal Carnival is coming! 

[seaman11]

On 7/28/2022 at 1:01 PM, mz-s said:

I don't see how anybody could fool themselves into thinking this recession will be any different than any other. Of course it will affect Carnival.

well how can it be a real recession with 3 % unemployment?  my business is doing very well and I booked two cruises with no real price hike at all. 

Edited August 1, 2022 by seaman11

[Purvis1231]

8 hours ago, BlerkOne said:

At least as big of a problem is the oil wasted, particularly by Americans who overconsume like there is no tomorrow. Whether it is gas guzzler vehicles or leaving lights and heat/ac on when no one is home.

Filling landfills with disposable plastics and diapers.

 

When the price of oil goes up, it takes Americans a while, but eventually consumption goes down. Funny how they don't really have to waste so much.

 

One of the biggest benefactors of covid has been the disposal food container industry. Schools, hospitals, restaurants, and food delivery services have fill untold tons of waste with paper, plastic, and Styrofoam containers. Not to mention all the other containers, boxes, etc from amazon, and all the other delivery services. 

[Purvis1231]

11 minutes ago, seaman11 said:

well how can it be a real recession with 3 % unemployment?  my business is doing very well and I booked two cruises with no real price hike at all. 

I too have several cruises books- all cheaper than before the shutdown.  Can the cruise lines continue to sell their cruises cheaper than before when all their expenses are up?

Edited August 1, 2022 by Purvis1231
typo

[BlerkOne]

2 minutes ago, Purvis1231 said:

I too have several cruises books- all cheaper than before the shutdown.  Can the cruise lines continue to sell their cruises cheaper than before when all their expenses are up.  

They can as long as onboard spend makes up for it.

[seaman11]

7 minutes ago, Purvis1231 said:

I too have several cruises books- all cheaper than before the shutdown.  Can the cruise lines continue to sell their cruises cheaper than before when all their expenses are up.  

i think I saw one stat where the avg cruiser spends $650 on board through drinks, casino , tours ect.  So I assume they make their money off that. plus I think cost will come down also after the summer.  with fuel prices coming down a bit. 

Edited August 1, 2022 by seaman11

[mz-s]

7 hours ago, BlerkOne said:

They can as long as onboard spend makes up for it.

I don’t think any cruise company that’s publicly traded has been profitable for going on three years (since March 2020)

[BlerkOne]

5 hours ago, mz-s said:

I don’t think any cruise company that’s publicly traded has been profitable for going on three years (since March 2020)

Not yet, but the cruises (at least for Carnival) are cash flow positive and some prices are going up. You have to crawl before you walk. I wouldn't be surprised if they turn profitable within that 3 year period

[BlerkOne]

[lostsoulcruiser]

On 7/30/2022 at 11:32 AM, ledges1 said:

It is rumored that Carnival is in talks with the Saudi investment fund to sell Seabourn to generate cash. The fund already has a 5.1% stake in Carnival.

From a May 2022 Travel Weekly article:

Carnival Corp. is considering selling its luxury Seabourn cruise line to the Saudi sovereign wealth fund, according to a CNBC report.

The report, citing unnamed sources, said that Carnival was in "preliminary discussions" to sell Seabourn. It said that the deal would give the Saudis a "stronger footprint" in the cruise industry while also giving Carnival access to more capital. 

Carnival may also want to pare down debt. Last week, Carnival Corp. priced a private debt offering of $1 billion in senior unsecured notes at an interest rate of 10.5%. The proceeds will be used in fiscal 2023 to make scheduled principal payments on prior debt.

 

On 7/30/2022 at 9:38 PM, TheSeagoer said:

It maybe wiser to dock the boats than pay expenses

Too much debt to service.  If the cruises can generate cash in excess of the cost of cruising (variable costs), they will run the ships to pay down fixed costs (debt, overhead etc).

 

Both CCL and RCL have reported advanced bookings to be strong, an indicator that customers want to return to vacations (count me in).  As long as these bookings stay strong and unemployment does not drift up significantly, prices will stay elevated (simple supply and demand).  

[mz-s]

2 hours ago, BlerkOne said:

3 million guests and still not profitable...

 

I have no idea what "but they're cash flow positive" means if they're still reporting quarterly losses. And judging by the stock's performance, nobody else does either.

[BlerkOne]

9 minutes ago, mz-s said:

3 million guests and still not profitable...

 

I have no idea what "but they're cash flow positive" means if they're still reporting quarterly losses. And judging by the stock's performance, nobody else does either.

It means the cruises make money. Just not enough to cover corporate expenses - like debt repayment - yet. The other cruise lines aren't hitting home runs. Or airlines. Etc. Yet 

[ledges1]

A profit is preferable, but a lot of companies do not make a profit. Zillow has not made a profit in over 10 years. Uber and Lyft are not profitable. I would not predict the demise of Carnival as many may fill inclined. In the long run, there could be additional consolidation and more ships scrapped. As mentioned earlier, Seabourn could be sold.

[seaman11]

1 hour ago, mz-s said:

3 million guests and still not profitable...

 

I have no idea what "but they're cash flow positive" means if they're still reporting quarterly losses. And judging by the stock's performance, nobody else does either.

no offense, if you do not understand how business works then I would just rather not comment.  they are taking in cash and soon will turn a profit barring any covid set back 

[mz-s]

1 minute ago, seaman11 said:

no offense, if you do not understand how business works then I would just rather not comment.  they are taking in cash and soon will turn a profit barring any covid set back 

 

It was a tongue-in-cheek comment and I realize that does not come across in text. My point was "cash flow positive" is irrelevant. "Profitable" is a relevant term but has largely alluded the cruise industry for nearly three years now.

[seaman11]

2 minutes ago, mz-s said:

 

It was a tongue-in-cheek comment and I realize that does not come across in text. My point was "cash flow positive" is irrelevant. "Profitable" is a relevant term but has largely alluded the cruise industry for nearly three years now.

Well i own a business so i understand that a pandemic will effect this and hit the cruise industry hard, im not understanding your argument,  they are increasing cruises not decreasing them, they will likely soon turn a profit, cash intake is going up, it takes time.  

[mz-s]

Just now, seaman11 said:

Well i own a business so i understand that a pandemic will effect this and hit the cruise industry hard, im not understanding your argument,  they are increasing cruises not decreasing them, they will likely soon turn a profit, cash intake is going up, it takes time.  

 

I heard "likely soon turn a profit" from $CCL 6 months ago...wake me up when it happens.

[BlerkOne]

7 minutes ago, mz-s said:

 

It was a tongue-in-cheek comment and I realize that does not come across in text. My point was "cash flow positive" is irrelevant. "Profitable" is a relevant term but has largely alluded the cruise industry for nearly three years now.

This is only mid 2022. Not overly close to nearly three years.

[ledges1]

https://finance.yahoo.com/news/royal-caribbean-shares-plunge-900-142716486.html

 

RCL just had a $900 million public offering. They need cash too.

[Buckeyefrank100]

On 7/28/2022 at 4:02 PM, BlerkOne said:

Pretty sure anyone who wants a job can find one.

True but wage growth pales in comparison to inflation.  It's much more expensive to survive now.

[cruisingguy007]

On 7/31/2022 at 5:40 AM, Joebucks said:

 

In most big companies, if you completely removed all compensation from a CEO (pay, bonuses, and stock options which they are supposed to be creating value in) you are lucky to give the entire workforce $100 total. What you are falling trap to is the ever-popular classism politics. Blame your problems on someone else. Seek the protective wing of someone who tells you what you want to hear.

 

Oh and then once you've removed the CEO or any incentive to run a big organization, watch what happens to the rest of the worker's wages when there is no leader. 

 

The problem is the lopsidedness, when you feast/pillage one the wages of your production/service staff over and over, while at the same time increasing your top end, something has to give. Say what you will but if a bunch of top end executives walk off the job most won't even notice, if your frontline/mainline workers do, everyone notices, yet they are constantly reminded that they are the ones who are expendable and less valuable. It's garbage, most companies are way too top heavy with redundant  people doing next to nothing but pilfering large chunks of the pie. This all started shifting with the garbage theory of "low skill", I detest that nonsense, there is nothing low skill about hard work and many of the suits couldn't hack it on the frontline/mainline of many industries that require actual labor. Even the lowly "burger flipper" that people love to make fun of is a tough job, those were some of the hardest working folks I've had the pleasure to work with in my younger days. It takes mad skills to manage a busy drive-through/dining room. Low skill my arse. Same with alll the other jobs that Americans love to farm out to others (and expect them to do it for poverty wages) because they don't want to do them (childcare/nanny, car washing, house cleaning etc). Too much elitism in America and no respect for labor.      

Edited August 1, 2022 by cruisingguy007

[Buckeyefrank100]

1 hour ago, mz-s said:

 

It was a tongue-in-cheek comment and I realize that does not come across in text. My point was "cash flow positive" is irrelevant. "Profitable" is a relevant term but has largely alluded the cruise industry for nearly three years now.

cash flow positive is NOT irrelevant.  Profitability is virtually irrelevant.  Cash flow is what they pay employee wages with, food, alcohol, fuel, debt service, etc.  Without cash, they go out of business quickly.  At the end of the day, cash is the ONLY thing that matters.