Royal Caribbean Provides Positive Outlook on Operations

Royal Caribbean has provided a positive outlook on business operations as new hope comes from the CDC and summer cruises could be back on.

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Royal Caribbean has been hitting the airwaves with positive news for a few weeks now. The corporation has released several important new itineraries that allow the line to start sailing again and have already proven extremely popular. Talks with the CDC are positive, and the line has recently taken control of a new ship.

It comes as no surprise then that the business update released by the cruise corporation is one of the more positive ones the Company has released in the last twelve months. This is especially true if we consider the news from the CDC this Wednesday, which will be minimizing the number of measures they require from cruise lines—making the U.S. restart a real possibility.

Even Alaska is Back on the Table

So far, the Company has four ships sailing, and it added an additional eleven vessels in the Caribbean and Europe for this summer. But, the one place the Company has been hoping to sail, the U.S., has been an elusive entity, until today that is.

Richard D. Fain, Chairman and CEO, said the following regarding the news from the CDC:

“We are looking forward to resuming operations out of various ports around the world in the coming months. In addition, we have had very constructive dialogues with the Centers for Disease Control and Prevention (CDC) in recent weeks about resuming cruising in the U.S. in a safe and healthy manner.”

Worth Reading: Alaska Senator Says “CDC is Dragging its Feet” On Allowing Cruises to Resume

Royal Caribbean has been insistent on incorporating the advancements in vaccines and medical science that have been realized in recent months. Something the CDC had done for the U.S. itself but had not incorporated into the plans for the cruise industry:

“Last night, the CDC notified us of some clarifications and amplifications of their Conditional Sail Order which addressed uncertainties and concerns we had raised. They have dealt with many of these items in a constructive manner that takes into account recent advances in vaccines and medical science.”

According to Richard D. Fain, this news not only sets the industry up for cruises from states like Florida, Texas, and Alabama. It also opened the door to Alaska. How this would be achieved remains unclear:

“Although this is only part of a very complex process, it encourages us that we now see a pathway to a healthy and achievable return to service, hopefully in time for an Alaskan season.”

Royal Caribbean Cruise Ships

Business Not Booming Yet

While the news is positive so far, the results from the First Quarter of 2021 are as expected. The Company again notes heavy losses, while the increased crewing of ships is starting to take a toll on the cash flow within Royal Caribbean.

Royal Caribbean says that as the Company returns to operation, incremental expenditures are expected to be incurred in bringing ships back to operating status, returning crew members to ships, and enforcing enhanced safety protocols.

Many variables are considered when deciding whether to return a vessel, including deployment opportunities, commercial potential, operating costs, and cash flow.

Nonetheless, Royal Caribbean says it is ready to go, Jason T. Liberty, executive vice president, and CFO:

“We are prepared and eager for the flywheel to start turning again. Moreover, we are optimistic that with the gradual resumption of cruise operations, our cash flow from operations will sequentially improve, driven by an increase in the inflow of customer deposits. We feel optimistic about our future and are thrilled to see more and more guests around the globe enjoying incredible vacations onboard our ships.”

Bookings for the remainder of the year are short of historical figures, while the news for 2022 is good. Bookings there are higher or at the same level as historical figures, while prices are higher.

So far, the Company has seen 75% new bookings vs. 25% bookings associated with the lift and shift and FCC policies that have been implemented for the pandemic.

Docked Royal Caribbean Cruise Ship
Photo Credit: Benjamin Clapp / Shutterstock.com

The Numbers

The Company reported a Net Loss for the first quarter of 2021 of $(1.1) billion compared to a $(1.4) billion loss in the prior year. The Company also reported an Adjusted Net Loss of $(1.1) billion for the first quarter of 2021 compared to an Adjusted Net Loss of $(310.4) million in the prior year.

The loss is, of course, a result of the impact of the COVID-19 pandemic on the business. The average monthly cash burn rate for the first quarter of 2021 was approximately $300 million.

Since the suspension of operations in March 2020, the Company has raised approximately $12.3 billion through various financial arrangements.

During the first quarter of 2021, the Company introduced Odyssey of the Seas to the Royal Caribbean International fleet and now expects the delivery of Silver Dawn to the Silversea fleet during the fourth quarter. The Company has two ship deliveries scheduled for 2022: Wonder of the Seas and Celebrity Beyond.

Also Read: Royal Caribbean Makes Tough Crew Decision

All in all, positive news from Royal Caribbean and for the cruise industry in general. While not all aspects are in place just yet for a full resumption of cruises worldwide, we can certainly see the puzzle pieces falling into place bit by bit.

Royal Caribbean Cruise Ship

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