Norwegian Cruise Line today reported quarterly and full-year financial results for Q4 2020, as well as the full financial year 2020, in addition to providing a business update and how it’s dealing with the current situation on suspending operations including millions lost due to the CDC’s Conditional Sailing Order.
Not only has the Conditional Sailing Order taken far longer to materialize than expected, but significant uncertainties also remain regarding specific requirements of the conditional order. It also includes the technical instructions that are still pending for all cruise lines.
The fact that Norwegian Cruise line had gone through the effort of staffing its ships after the hopeful news in November and has had to repatriate a majority of its crew members has cost the company a significant amount of money.
The Most Challenging Year
Norwegian Cruise Line Holdings President and Ceo Frank Del Rio thinks the rollout of vaccines and the progress towards ‘herd immunity’ is encouraging for the future of cruising after a very challenging 2020:
“While 2020 has been without a doubt the most challenging year in the company’s 50 plus year history, our team responded to the unprecedented environment with swift and decisive action. Our company demonstrated once again its adaptability and resiliency, underscored by the unwavering commitment and dedication from our team members across the globe. Looking ahead, we are encouraged by the accelerating rollout of vaccines, the progress towards herd immunity and the strong demand for future cruise vacations.”
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On the vaccines, and a point of concern for many cruise passengers is whether cruise lines will be requiring vaccinations before guests can come onboard. Although the statement that the company has sent out is rather vague, it seems NCL is certainly contemplating making the vaccinations at least part of their overall COVID-19 plan:
The company is continuously evaluating and identifying ways to improve these standards as science, technology and knowledge of SARS-CoV-2 advances including incorporating recent vaccine advancements into its overall strategy for the eventual return to service.
If this means the company is now making vaccinations mandatory, remains to be seen.
NCL’s Financial Position
The most surprising factor in the numbers revealed by Norwegian Cruise Line was the amount of money lost due to the extended delays of updated CDC technical specifications. In November last year, NCL had started to embark crew members on its ships. The company anticipated it would be sailing early in 2021.
As Norwegian Cruise Line worked to prepare its vessels for a possible return to service in early 2021, it spent an additional $15 million a month on relaunch-related expenses.
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These actions were in accordance with the CDC Conditional Order, which failed to take effect. The relaunch costs were mainly due to crew re-staffing, re-positioning and provisioning vessels, implementing new health and safety protocols, and marketing investments.
Further, as of December 31, 2020, the company’s total debt position was $11.8 billion, and the company’s cash and cash equivalents were $3.3 billion. The company reported an Adjusted Net Loss of $2.2 billion in 2020. Cash burn was high at 190 million per month for the last quarter, which NCLH thinks will remain there for the 1st quarter of 2021.
Looking Towards The Future
The outlook for 2021 is uncertain for everyone, as it is for Norwegian Cruise Line; the company, therefore, expects the first quarter of 2021 to be at a loss, unsurprising as the company will not have any ships sailing in the first quarter.
What will happen after depends entirely on the progress made with vaccinations worldwide, the re-opening of international travel, and the issuing of instructions by the CDC and subsequent approvals to sail.
Where that leaves Norwegian Cruise Line seems uncertain, that it is making significant losses is clear.