With 29 ships operating and plans for almost 80% of the fleet operational by the end of the year, Royal Caribbean is well underway to make 2021 as successful as it can be.
The financial results from the world’s second-biggest cruise operator have been disappointing for the last 18 months, and the second-quarter results show that Royal Caribbean isn’t there yet, but the company is well underway to recover from the hits it has taken during the pandemic.
Back at Sea!
The Royal Caribbean group of companies, which consists of Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, and also owns a 50% joint venture that operates TUI Cruises and Hapag-Lloyd Cruises, is currently sailing with 29 cruise ships worldwide. A significant effort considering the difficulties all cruise lines have experienced throughout the pandemic.
Also Read: Which Royal Caribbean Cruise Ships Have Resumed Operations?
It is, however, not enough for the world’s second-biggest cruise operator. By the end of August, this number will have grown to 36 ships, and by the end of the year, the company expects to have 80% of its fleet operational worldwide.
The restart of this many cruise ships was always going to cause some financial disappointments, and that is what the numbers are proving. The second quarter is another financial result significantly down from pre-pandemic numbers, although clearly, the momentum is shifting.
Richard D. Fain, Chairman, and CEO of Royal Caribbean International:
“We’re thrilled to be back on the water at accelerated speed in the US and elsewhere. After 16 months of being at a virtual standstill and another painful financial result this quarter, the flywheel is clearly picking up momentum. Since the pandemic began, our objective has been to make our ships safer than Main Street, and today, we are proving that ambitious goal is achievable. We are also encouraged by the booking outlook especially for 2022 and beyond.”
The company recorded a slightly elevated cash burn of $330 million per month over the last quarter. Much of this has to do with continuing efforts to bring ships back to operating status, return crew members to ships, and implement enhanced health and safety protocols.
Those same health and safety efforts will be a positive sign for investors; while Royal Caribbean and Celebrity Cruises have registered several COVID cases, both cruise lines dealt with these effectively.
How is 2022 looking for Royal Caribbean?
Booking numbers have always been a strong indicator of how a company is faring. Royal Caribbean has seen some positive signs in this area. Overall bookings have improved significantly over the booking recorded in the first quarter of 2021. In June, Royal Caribbean recorded 90% more bookings than the first quarter. At the same time, numbers for 2022 look much better than they do for 2021.
Richard D. Fain, Chairman, and CEO of Royal Caribbean International:
“The surge in bookings has been extremely encouraging especially for 2022 and beyond. The return of cruising has been faster than anyone expected, and we are excited to gradually restart our presence in our key markets.”
While the Delta variant is gaining enough momentum to have every CEO nervous, Royal Caribbean has already noted a modest impact on closer-in bookings; Richard Fain remains optimistic:
“We are watching the impact of the Delta variant and other likely variants, but overall, we remain optimistic in our mounting trajectory going forward. People also book their cruises long in advance, so we are concentrating on maintaining our price levels while growing our load factors.”
Key Points For Royal Caribbean’s Second Quarter
- Royal Caribbean announced 12 ships operational by the end of August from the United States.
- Thirty-six ships from the company’s five brands, or over 60% of its fleet, have either resumed sailing or announced their intention to resume sailing by August 31, 2021.
- Bookings increased significantly over the last months, with second-quarter bookings 50% higher than first-quarter bookings.
- The cash burn rate increased to $330 million, mainly due to increased spending on restarting ships, flying crew members to the vessels, and increased costs due to health and safety procedures.
- Royal Caribbean reported a US GAAP Net Loss for the second quarter of 2021 of $(1.3) billion or $(5.29) per share and an Adjusted Net Loss of $(1.3) billion or $(5.06) per share.
- Royal Caribbean’s liquidity remains healthy with approximately $5.0 billion.
While the second quarter has been impacted by the delays caused by the CDC’s Conditional Sail order, Royal Caribbean seems to have taken a route showing a genuinely positive outlook for the rest of 2021 and high bookings for 2022.
Whether or not this trend will continue depends heavily on how COVID-19 continues to impact the cruise industry. Not just through regulations and changes in protocols from governments and ports but also the Delta variant, impacting more and more people worldwide.
