The Great Cruise Comeback is moving along so well that Norwegian Cruise Line Holdings (NCLH) is carefully looking towards the future with a positive mindset.
The cruise company hopes to be operational with the majority of its fleet by the end of 2021; during spring of 2022, it hopes to have its entire fleet of ships across its three brands operational. NCLH believes 2022 will bring the company back to near normal, with positive cash flow and a profitable business expected.
The third-largest US-Based cruise operator released its third-quarter financial details this week. The results show a company that isn’t back yet, but one that certainly is on the road to recovery.
Great Cruise Comeback Successfully Executed
With eleven ships operating to date out of 28, the Great Cruise Comeback, as NCLH likes to call its restart plans, is well underway to be a resounding success for the cruise company. So far, occupancy levels are still around a self-imposed 50-60%. Over the coming months, this number will expand. As will the number of ships operating.
Frank Del Rio, president, and chief executive officer of Norwegian Cruise Line Holdings Ltd.:
“Our Great Cruise Comeback is on track with 11 ships to-date across our three award-winning brands successfully resuming cruising. Initial trends are extremely positive with strong onboard revenue, high guest satisfaction scores and our comprehensive science-backed SailSAFE health and safety protocols working as designed to minimize the impact of COVID-19,”
By the end of the year, NCLH hopes to be operational with approximately 75% of its total capacity, while in April 2022, the entire fleet will be sailing once again. This includes the ships for Norwegian Cruise Line, Regent Seven Seas, and Oceania Cruises. The first ship to resume sailings was Norwegian Jade in July of this year. However, do bookings reflect the ships sailing? It seems so.
Future Demand Increasing
Norwegian Cruise Line Holdings expects to be fully cash flow positive by the first half of 2021; it expects to be fully profitable by the second half of 2022. This comes as the company is already seeing ships operating cash-flow positive, even with reduced occupancy.
Frank Del Rio: “While consumer concerns surrounding the Delta variant resulted in a slowdown in bookings during the third quarter, net booking volumes have improved over the past six weeks and we continue to see robust future demand for cruising particularly for the second half of 2022 and beyond when our full fleet is expected to be back in operation at normalized occupancy levels.”
Also, bookings are showing great consumer trust, particularly for the second half of 2022 and 2023; however, for the remainder of 2021, there has been some slowdown due to surges in the Delta variant. It shows that bookings do continue to be heavily influenced by the ongoing health and safety issues worldwide.
Also Read: Norwegian Cruise Line Removes Bermuda from Transatlantic Voyage
That being said, the traditionally busiest time of the year for cruise bookings is during the last quarter of the year with Black Friday and Christmas sales. NCLH continues to be a financially healthy company, despite the issues it has dealt with in the last 18 months.
NCLH’s Finances On The Way Up
Although the numbers sound somewhat worrying, with 12.4 billion in debt, the company is becoming healthier again each day. Not only was the cash burn rate lower than initially expected at 275 million instead of 285 million, advance ticket sales now stand at 1.7 billion.
The cash burn rate will be increasing in the coming month as more ships come online across the three brands; however, with that comes revenue that increased to $153.1 million compared to $6.5 million in 2020 as cruise voyages resumed in the quarter.
Mark A. Kempa, executive vice president, and chief financial officer of Norwegian Cruise Line Holdings Ltd.:“We are incredibly pleased with our team’s flawless execution of our phased voyage resumption plan and are encouraged to see strong consumer demand, onboard spend and high guest satisfaction across all of our brands. As we look ahead, we remain focused on rebuilding our strong track record of financial performance, and delivering on our attractive and disciplined growth profile beginning with the debut of the record-breaking Norwegian Prima in summer 2022.”
The company’s strong confidence in the future shows in the number of ships that NCLH will launch in the next few years. This includes six Prima-class vessels for Norwegian Cruise Line between 2022 and 2027, one Vista-class in 2023 and an Allura Class ship in 2025 for Oceania, and the launch of Seven Seas Grandeur in 2023.
Also Read: Which Norwegian Cruise Line Ships Have Restarted?
Although looking to the future is always tricky, NCLH believes the second half of 2022 will be when the company is genuinely back in operation.
Until then, the company will slowly but surely bring more ships online, with the last one being Oceania Nautica from April next year and increasing occupancy levels onboard. So far, Norwegian Cruise Line Holdings has shown that slow and steady does win the race.
