Carnival Corporation, the biggest cruise company globally, released its third-quarter results today, September 24, and the news is overwhelmingly positive. Not only is the company experiencing record-high guest feedback scores on all of the operating brands, but the company is also now seeing record bookings in the future, and cruises are making money once again.
Arnold Donald, the company CEO, reports Carnival Corporation is now operational with more vessels than the competition, in more regions, carrying more guests. Something that seemed far away just a year ago.
The return of cruising has been wildly successful for Carnival Corporation. As it stands, the company is operational with eight out of 9 of its brands, and occupancy numbers have been steadily growing since June of this year, from 39% in June to 59% in August.
The only cruise line which is not yet operational is P&O Australia, due to the ban on cruising and the uncertain health regulations that will need to be in place in the country.
Arnold Donald had the following to say: “Beyond the enthusiasm of our guests and crew and the unprecedented net promoter scores, it is difficult to demonstrate just how successful our restart effort has been because many cruises while generating positive cash flow, were limited to scenic cruises without ports of call, and generally priced well below the attractive destination-rich cruises we normally offer.
One of the most successful restarts the company has seen has been for its American brand, Carnival Cruise Line. The cruise line sailed with the most anticipated cruise ship worldwide, Mardi Gras, at the end of July. Currently company is operational with no less than 11 ships. What is even more impressive is the immense popularity the cruise line has seen for its ships, Arnold Donald:
“Carnival Cruise Line resumed operations in July. Even with the unusually short booking window and capacity limitations, the brand achieved occupancy of approximately 70%, which speaks to the strong underlying demand for our core product.”
Carnival Corporation did see a slight slump in booking numbers in August of this year, mainly due to the uncertainty surrounding the effects of the Delta variant worldwide. Other than that the company has seen a solid booking period.
For the second half of 2022, the company reports the booking numbers are higher than the record-breaking 2019.
Donald added, “Our booked position for the second half of 2022 is at a new historical high, including our seasonally strong third quarter with all our ships planned to be in operation, despite reduced marketing spending. The broader environment for travel, while choppy, has improved dramatically since last summer and we believe it should improve even further by next summer, if the current trend of vaccine rollouts and advancements in therapies continues. We have also opened bookings for further out cruises in 2023, with unprecedented early demand.”
The company reports that customer deposits increased $630 million to $3.1 billion as of August 31, 2021, from $2.5 billion as of May 31, 2021. It shows that the company sees an increase in customer deposits for the second quarter running.
The overall success of the third quarter, and the positive outlook for Q4 and beyond, is reflected in the company’s financial statements. Cash burn has gone below the expected guidance at $510 million for Q3 2021.
The monthly average cash burn rate includes revenues earned on voyages, the ongoing ship operating and administrative expenses, restart spend, working capital changes, interest expense, and capital expenditures. Carnival Corporation reported a U.S. GAAP net loss of $2.8 billion and an adjusted net loss of $2.0 billion for the third quarter of 2021.
The company ended the third quarter with no less than $7.8 billion of liquidity, a number they believe will see them through the entire restart period. This comes together with the news that the voyages the eight brands sailed in the third quarter have been cash flow positive, something that will surely boost confidence.
“Being the largest in our industry, it is not surprising that we are now successfully operating at a larger scale than anyone else in the industry. Our protocols have been working well and are enabling us to build occupancy levels as we return more ships to service. Looking forward, we continue to work towards resuming full guest cruise operations by next spring, in time for our important summer season, where we make the bulk of our operating profit.”
The business update is a positive turn on the more dour reports we have gotten used to over the last 18 months. It seems then that not only do we see a positive upturn in the number of ships sailing, business is also slowly but surely returning to normal for Carnival Corporation.