Carnival Corporation released its preliminary financial information for Q4, which ended November 30, 2020. While the news is, in general, what could have been expected with heavy losses, some surprises have been released.
Instead of the 18 ships that were previously reported to be sold or scrapped, the company says it will be getting rid of 19 vessels.
The highlights for the Carnival Corporation Q4 financial statement are:
- The company will be selling 19 vessels, instead of the 18 reported earlier.
- Carnival Corporation suffered a net loss of $2.2 billion and an adjusted net loss of $1.9 billion.
- The company ended Q4 with $9.5 billion in cash and cash equivalents, significantly higher than Q3.
- The cash burn rate has improved over Q4, compared to Q3, mainly due to the timing of capital expenses.
- Bookings are still showing positive signs and ahead of 2019 numbers.
Selling More Ships Than Expected
Only yesterday, Cruise Hive reported on the scrapping of Costa Victoria and the fact that Carnival Corporation was planning on offloading a total of 18 vessels. This has now been increased to 19 ships. Which ships will be number 18 and 19 is not clear at this time.
Fifteen vessels have already left the company, and four more will follow. The vessels account for 13 percent of the total amount of berths in the entire fleet pre-pandemic. However, a clear sign that the ships were not profitable anymore; they represented a mere three percent of operating income in 2019.
The company has been trying to rejuvenate the fleet throughout its separate cruise brands lately. It expects the fleet will be more efficient with about 14% more births per vessel and an average of the fleet of 12 years old in 2022, versus 13 years in 2019.
Losses Mounting, Cash Flow and Cash Burn Improved
Despite all the efforts to bring down the fleet’s age, scrapping and selling old, ineffective vessels, the pandemic is still taking its toll. The company has had to raise over $19 billion through various financial constructions since March 2020. While all these transactions have provided a road to surviving the pandemic, losses for Q4 still amount to $2.2 billion.
Carnival Corporation & plc Chief Financial Officer David Bernstein noted:
“We ended the year with $9.5 billion in cash and have the liquidity in place to sustain ourselves throughout 2021, even in a zero-revenue environment. While we raised capital mainly through debt this year, in the last few months, we opportunistically strengthened our capital structure.”
Cash Burn has improved for the company; this was around $500 million per month for Q4, while the company is expecting this to go up for various reasons once ships startup.
Bookings On The Up
The bookings for 2021 do look extremely promising. According to President and CEO Donald Arnold, bookings are projected to be ahead of 2019 numbers. 2019 was the most successful year for cruise ships and cruise lines ever. Any approach of those numbers will mean a successful step towards recovery:
“The booking trends that we have consistently experienced throughout this period affirm the strong fundamental demand for our brands, which will facilitate our staggered resumption and support the long-term growth of our company.”
Mixed messages from Carnival Corporation then, while booking projections are strong, the losses will still be a worrying point for the largest cruise company in the world.
What is certain is that the addition of another vessel to leave the fleet is that the company is eager to continue its efforts towards becoming and staying a financially stable organization.