Royal Caribbean Issues Update Detailing Difficult Financial Status

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Royal Caribbean Group issues a business update today in which the company goes into detail on the cruise giant’s financial position. Safe to say, it’s not all sunshine at Royal Caribbean.

The company operates more than 60 ships and is the sole owner of Royal Caribbean International, Azamara, Celebrity Cruises, and Silversea Cruises. The company also owns a 50% joint venture interest in German TUI Cruises, which operates both TUI Cruises and Hapag-Lloyd Cruises.

The Impact of COVID

Royal Caribbean lost approximately 80% of its revenues worldwide due to COVID-19 over the first six months of this year. While revenue was at $11 billion last year, income this year after six months of operations was at a mere $2.2 billion.

This all means that over the first six months of the year, the company lost more than $3 billion. That being said, the company still has a liquidity of $3.7 billion and a cash burn rate of $250 to $290 million per month.

So while the situation is not good for Royal Caribbean, it still has some cash to survive a few more months. Investors might not be thinking the same way, as the stock price lost more than 10% this morning.

Update on Bookings

The company also elaborated on where it stands on bookings. While the bookings for 2021 have improved, they are still below pre-COVID-19 levels.

As of June 30, 2020, the company had approximately $1.8 billion in customer deposits. At the same time, about 50% of the guests booked on canceled sailings have requested cash refunds.

Reorganizations

With losses this big, some reorganizations have to be done. Spanish cruise operator Pullmantur has already filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of the COVID-19 pandemic on their operations. The Pullmantur brand has canceled all of its ship operations until, at least, November 15, 2020.

Also Read: Royal Caribbean Extends Suspension for Another Month

Royal Caribbean has further reduced its operating expenses and is exploring the possibility of several ships in the fleet transitioning to cold layup. Cold layup would mean that Royal Caribbean is not planning on using these vessels for a significant amount of time.

Royal Caribbean Remains Optimistic

To conclude the update, Royal Caribbean stated that they have no updates from the CDC on when sailing could resume. They do remain optimistic that the recommendations from the Healthy Sail Panel will be sufficient and reason for the CDC to approve a resumption of operations:

“We remain optimistic that we will be able to commence commercial sailings in 2020; however, we can provide no assurance that we will be able to return to service within such timeframe.”

So while the cruise industry remains hopeful as ever, the fact of the matter is that the entire cruise industry is burning cash at astonishing rates. The two largest companies together, Carnival and Royal Caribbean, burn more than $1 billion each month that the CDC upholds its No Sail Order.

Photo Credit: Benjamin Clapp / Shutterstock.com

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Robert McGillivray
Robert McGillivray
Robert has been involved in the cruise industry since January 2007. He joined his first ship, the Seabourn Pride, in Miami Florida, and never looked back. Robert started his cruise career as a bar-waiter and worked his way up to being a corporate trainer for the same luxury 6-star cruise line. After a short break from ships in 2013, Robert has worked as a Hotel Director onboard several different cruise ships worldwide and even in Antarctica, and on the North Pole. As a writer for Cruise Hive Robert stays on top of all current developments and brings you breaking news, facts, and special reports. As an avid traveler and photographer, Robert has visited no less than 101 countries worldwide and stepped on to his 7th continent on his 30th birthday. His photos have been published by news media like Bloomberg and The New York Times, and are used by Celebrity and Azamara Cruise lines for their promotional materials. Robert currently resides in the Philippines on the tropical island of Panglao, with his wife and two daughters. Find out more about us here.

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