Norwegian Cruise Line Still Working on a Path Forward

Norwegian Cruise Line has provided a business update and is still working on a path forward to resume cruises from the US.

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Norwegian Cruise Line has been battling it out with the CDC and spearheaded the push for a July restart this summer for the cruise industry. It would have been expected that the 1st quarter earnings report the Company released today would have made a positive impression. But, it seems not.

In an earnings report publicly traded companies traditionally report how they’ve been doing financially in the first three months of the year and how they believe the future business will develop.

There is a growing feeling that Norwegian Cruise Line Holdings is not as forward-looking and optimistic as Royal Caribbean has been. In fact, the cruise line said it is looking at the procedures the CDC has provided and is evaluating if July will be feasible.

Still More Guidance Needed

The earnings release comes one day after the CDC released phase 2B and 3 of the conditional sailing order. Something the CDC did as well when Royal Caribbean brought out its earnings report only two weeks ago.

Whether this has been on purpose remains to be seen; however, it does raise questions whether Frank Del Rio is referring to phase 2A or to phase 2B & 3 of the conditional sailing order when he talks about the resumption of cruising and says NCLH needs more clarification:

Frank Del Rio, CEO of Norwegian Cruise Line Holdings:

“As for the resumption of cruises from the US, we continue to engage in dialogue with the U.S. Centers for Disease Control and Prevention. Our team is working through the recently issued and modified technical guidance for which additional clarification is needed on how the incorporation of vaccine requirements impacts the Conditional Sail Order and our path forward.”

Although the aim for a cruise restart in the United States on July 4 seems to be highly unlikely at this point, NCLH has been focussed on bringing cruising back safely and healthily, wherever it will be sailing.

As the cruise company with traditionally the oldest demographic of guests onboard its three cruise lines, it will be offering vaccinated cruises only for all initial sailings. They are leaving the door open for changes in that policy in the future. The cruise line has now scheduled cruise resumptions in three different areas: The UK, Mediterranean, and the Caribbean.

Related: Two Norwegian Cruise Line Ships to Restart Operations in September

Norwegian Epic in Europe
Photo Courtesy: Norwegian Cruise Line

Resumption of Cruising for the NCLH Fleet

Norwegian Cruise Line Holdings President and CEO Frank Del Rio sent two much-talked-about letters to the CDC not too long ago. In these letters, he urged the CDC to allow the cruise line to resume cruising in the United on July 4, and at the same time, asked the CDC to lift the CSO.

With the vaccination plan the cruise company has in place, it wasn’t a bad idea. And while the CDC has now complied and OK’d the plan, for the most part, Norwegian is not sure it will be sailing any time soon in the US, it recently even canceled most of its voyages from the US, for some ships into the fall of 2021. Something echoed in the earnings report:

The Company remains actively engaged in discussions with the CDC regarding recently issued and modified technical guidelines and incorporating vaccines into the CSO. As valuable time goes by, given the lead time needed to stand up a ship and the need for an acceptable and definitive agreement with the CDC, a potential mid-summer restart from US ports could be in jeopardy.

For now, the line has the following restarts planned in, and these cruises will most likely remain in place:

Norwegian Cruise Line

  • Norwegian Jade: Seven-day cruises to the Greek Isles from Athens (Piraeus), Greece, beginning July 25, 2021,
  • Norwegian Joy: Seven-day Caribbean itineraries originating in Montego Bay, Jamaica, beginning on August 7, 2021
  • Norwegian Gem: Seven-day Caribbean itineraries from La Romana, Dominican Republic, beginning August 15, 2021.
  • Norwegian Epic and Norwegian Getaway: Voyages in the Mediterranean departing from Barcelona and Rome (Civitavecchia) from September onwards.

Oceania Cruises

  • Marina: Will restart cruise operations in August, resuming her originally published voyage schedule commencing on August 29, 2021, in Copenhagen.

Regent Seven Seas Cruises

  • Seven Seas Splendor: will return to sailing from the UK beginning September 11, 2021.
Oceania Cruise Ship Funnel
Photo Credit: StudioPortoSabbia / Shutterstock.com

Norwegian Cruise Line Numbers

NCLH is reporting substantial booking numbers for the first half of 2022 and is, in fact, ahead of the numbers of 2019. Something many had expected as 2022 is seen as potentially the most successful year in history for the travel industry.

As of March 31, 2021, the Company’s total debt was $12.2 billion, and the Company’s cash and cash equivalents were $3.5 billion.

Worth Reading: 10 Norwegian Cruise Line Stock Price Benefits and Tips

The Company has taken several additional actions to enhance its liquidity since December 31, 2020, through equity offerings, issuing senior notes, amended credit agreements, and deferring newbuild related expenses. The cash burn remains at the predicted level of $190 million, or $170 million if debt modification costs are excluded.

This cashburn comes from ongoing ship operating expenses, administrative operating expenses, interest expense, taxes, debt deferral fees, and expected non-newbuild capital expenditures. The financial balancing act will likely continue for a while longer though:

Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd.:

“As we prepare for our imminent resumption of cruising this summer, we will continue to balance our cash needs to maximize financial flexibility and position us well for an extended recovery period.” 

It seems that Norwegian has changed its tone somewhat from the positive outlook it had in December when it started embarking crew members onto the ships awaiting the CDC’s OK to start sailing. Something that backfired and would have had some effect in the NCLH offices.

Also Read: When Will Cruises Resume in 2021?

NCLH is now a lot more careful and, predictably, is happy to wait and see what is on the horizon for the next few months. With a reasonably healthy cash balance, it has the time and the room to do so.

Norwegian Cruise Line Ships

Feel free to discuss this topic and all things cruise at our new boards. A place where readers can ask questions, help their fellow cruisers and general cruise discussions on cruise lines and ports.

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