All cruise lines are losing money hand over fist. But how much loss can these companies realistically bear? As the pandemic rages on, cruise companies are starting to feel the pressure.
As we look at a resumption of cruises in the first months of 2021, we take an in-depth look at the staggering numbers released by Stock Apps.
The Largest Cruise Company, Burning The Most Cash
On August 31, 2020, the third quarter ended for Carnival Corporation. During the pandemic, the first full quarter showed the full effect the operations pause was having on the largest cruise company in the world.
Carnival Corporation suffered a $2.9 billion loss during this period. In Q3 2019, the company made revenues totaling $6.53 billion. In Q3 2020, the company made a mere $31 million. A 99.5% drop in revenue.
Carnival’s stock price has suffered as well. Trading at $51.35 in January, the stock lost 68% of its value and is now trading at a mere $16.21.
The shocking number is the cash the company is burning monthly to be able to stay afloat. Every month during Q3, Carnival Corporation burned through $770 million cash on average.
The company does have the resources to survive the current situation for a few more months. It reported cash on hand of $8.2 billion at the end of Q3. While that may seem like a lot of money, the company will burn through much more per month once it starts getting ships back to operational capacity at the end of 2020 and the beginning of 2021.
Royal Caribbean not faring much better
In Q3, Royal Caribbean reported a loss of $1.2 billion according to the earnings report released.
Royal Caribbean Group is the owner of four brands: Royal Caribbean International, Celebrity Cruises, Silversea, and Azamara. Royal Caribbean Group is also a 50% owner of a joint venture that operates TUI Cruises and Hapag-Lloyd Cruises.
Due to its smaller size, Royal Caribbean has been burning less cash each month; however, with $250-270 million each month, these are still respectable numbers.
Similar to Carnival Corporation, the Royal Caribbean stock has been hit hard by the pandemic in 2020. Trading at $121.18 on January 19, 2020, the stock had lost around 56% by November 2020. It is now trading at $60.59.
The question remains how long Royal Caribbean will be able to keep this up. As with Carnival Corporation, it will start burning through cash faster and faster once operations resume.
As of September 30, the company had liquidity of approximately $3.7 billion, including $3.0 compared to $4.1 billion as of June 30.
The Biggest Loser? Norwegian Cruise Line
The biggest loser during the pandemic seems to be Norwegian Cruise Line Holdings or NCLH. The company which operates Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas could have an estimated 99.45% to 100% loss for the period.
Its revenue has also crashed, going down from $1.66 billion to $0.02 billion, posting a drop of 99%. Norwegian Cruise Lines stock is suffering badly, losing more than 70.95%.
The Global Scale Of The Industry
While the scale of the losses is mindboggling, the above doesn’t tell the whole story. The ‘Big Three’ represents a mere 75% of the global industry. There are over 50 cruise lines with 272 ships (associated with CLIA), and this number is still growing as new ships continue to be delivered.
The cruise industry created 1.1 million direct jobs. It served 30 million passengers in 2019, and this number was expected to reach 32 million in 2020 before the pandemic. The cruise industry had a total financial output of $134 billion in 2017, and this number went up in 2018 and 2019.
The total amount in $ the operations pause has cost is hard to predict. However, according to Cruise Lines International Association, cruise suspensions cost the U.S. economy over $25 trillion and 164,000 jobs.
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