Cruise Ships Still Being Delivered, Can Cruise Lines Afford Them?

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It is easy to have some negative feelings when we think about a resumption of cruises, and when that will finally happen. With endless delays, postponements, and cancelations over the last twelve months, those feelings are entirely reasonable, one would say.

However, if we look a little further in the future, the cruise industry itself seems to be flourishing in one particular area: newbuilds. Despite having virtually no income over the last year, cruise lines are building a massive amount of new vessels.

Now, most of these vessels have been in the planning stages for, in some cases, 4-5 years, and cruise lines will have been hard-pressed to cancel these orders, but then again, it would not have been the first time that happened. The fact that all these vessels are still going ahead means great confidence in the cruise industry that better years are to come.

From LNG to the Extreme

For 2021 there are a staggering 28 ships on order and scheduled to be delivered this year. No less than eight of these will be 2,000+ passenger ships. The rest is split up between the ultra-luxury ships or expedition ships.

Is the cruise industry overplaying its hand, or are these new ships an actual improvement for the industry as a whole?

Well, as with all modern technology, the cruise industry has undoubtedly heard the pleas from the general public to work on its environmental image. The arrival of the new LNG class ships is a high point in the cruise industry’s history, parting ways with the more pollutant and less energy efficient heavy fuel oils.

LNG ships scheduled to be delivered this year are the 183,900 gross ton AIDAcosma and Costa Toscana, both from Carnival Corporation who are setting the tone for LNG powered vessels, having already taken delivery of Carnival’s Mardi Gras, Costa Smeralda, P&O Cruises Iona, and AIDAnova.

Costa Toscana Float Out
Costa Toscana Under Construction at Meyer Turku, Finland (Photo Credit: Meyer Turku)

Other large vessels that should be on every cruise fan’s radar include MSC Cruises’ sister ship to MSC Seaside, the MSC Seashore, which will come with several upgrades over her sister. MSC has changed and re-designed more than 40% of the ship, including a 16-meter extension of the ship. The more extended design will accommodate 200 additional cabins, a larger Yacht Club, and an additional double-deck aft lounge.

MSC Seashore Rendering
Rendering Via: MSC Cruises

Of course, we can’t leave out the new 169,000 gross ton, 347.1 meters, Odyssey of the Seas from Royal Caribbean. She will be the fifth Quantum/Quantum Ultra Class ship to be constructed, following Quantum of the Seas, Anthem of the Seas, Ovation of the Seas, and Spectrum of the Seas.

Also Read: 15 Best New Cruise Ships to Begin Sailing in 2021

Can The Cruise Lines Afford All These Ships

The question on many people’s minds is where the money is coming from to pay for all these ships after 12 months of no sailing. As we said before, the cruise lines have been planning these vessels for several years.

Even though cruise lines have no income now, they have enjoyed many fruitful years. Even now, not many banks would refuse credit to Royal Caribbean or Carnival Corporation.

No matter what the current situation is, the fact is that cruise ships last at least 15-20 years on average. It is believed that it would take a cruise line between 6-10 years of operation to profit on a new build.

Spectrum of the Seas Under Construction
Photo Credit: Meyer Werft / Royal Caribbean

As most ships these days are mortgaged to the maximum amount possible, with a fixed mortgage of seven years being the apparent norm, ship owners will usually endeavor to pay off this mortgage within that period. You can read this PDF about the methods in funds for new cruise ships.

And this, in any bank’s mind, is a very reasonable time slot. As long as the ship runs for ten years, she will always run a profit for her parent company.

Although the Pandemic has caused havoc on the industry for over a year now, this will come to an end. And when it does, we will have new shiny ships, new entertainment options, new restaurants to enjoy, and the chance to savor what we’ve missed for all these months.

Main Photos Credit: Edwin Muller Photography / Shutterstock.com

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