Royal Caribbean announced its financial results for the 2020 financial year and provided insights into where the company will be heading this year.
As can reasonably be expected, the company experienced huge losses due to the pandemic, calling it the most difficult time in the company’s history. It’s not all bad though, bookings are positive.
At the same time, guest feedback from cruises in Singapore and the Canary Islands onboard affiliate cruise line TUI/ Mein Schiff has been overwhelmingly positive.
A Painful And Profound Impact
Royal Caribbean CEO and Chairman Richard D. Fain called the last 12 months the most painful the company has had to go through in its history. The company’s brands Royal Caribbean International, Celebrity Cruises, and Silverseas, have been at a virtual standstill since the company’s voluntary pause in operations on March 13, 2020.
Richard D. Fain, Chairman, and CEO, said:
“The COVID-19 pandemic is having a painful and profound impact on our world and our business; unquestionably, this crisis is the most difficult in the company’s history. We remain confident about the ability of our company to recover and return to the positive trajectory we were on previously,”
The chairman remains optimistic as he believes a sharp decline in cases and increased vaccination grades show that a return to business is imminent:
“We are encouraged to see the sharp decline in cases and the growing availability of vaccines. We can’t wait to get back to the business of showing people the world and making great memories.”
While a return to cruising is something to look forward to, right now, the cruise line will be focussed on its financial numbers, which for all intents and purposes, do not look good.
Loss of $27.05 Per Share For 2020
$1.4 Billion is the loss that Royal Caribbean made in the 4th quarter of last year. The loss for the fourth quarter and full year of 2020 results from the impact of the COVID-19 pandemic.
Even now, the company is still burning cash at a rate of $250 million to $290 million per month. This amount will increase once the company has the go-ahead to start crewing the ships for guest operations.
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The resumption is still a fluid and unknown factor for this year. Although ships are currently scheduled to sail at the end of April and May, the company acknowledges that the CDC’s framework remains uncertain in many areas.
The framework is an important step, but due to the lack of specifics, timings, and the cost of implementing its requirements, Royal Caribbean expects the return the be a phased approach. Initial cruises will have reduced guest occupancy, modified itineraries, and enhanced health and safety protocols.
A positive note is the ships sailing in Singapore and the Canary Islands. Quantum of the Seas is operating out of Singapore and TUI Cruises, a part-owned affiliate, has three vessels operating in the Canary Islands since November.
“Guests are sharing very positive reviews, and we also see a higher proportion of first-time cruisers than expected. We believe that these cruises, even before the availability of vaccines, are helping us learn and demonstrate to others how we can operate successfully under the current COVID-19 environment.”
How Does The Future Look?
Although the cruise line will need to bring the ships out of various stages of lay-up, return crew members to the ships, and comply with a vast number of requirements, it is also looking forward to what this year and next year will bring for the company.
Bookings have been excellent throughout for all three brands. Bookings for the first half of 2022 are within historical ranges. However, it shows how big the will is of the people to return to cruises as the company spent little on marketing or sales.
Approximately 75% of bookings made for 2021 are new, and 25% are due to the redemption of FCCs and the “Lift & Shift” program. The company continues to provide guests on suspended sailings with the option to request a refund, to receive an FCC, or to “lift & shift” their booking to the following year.
After the sale of Azamara cruises last month for $201 million, and Celebrity Xperience, Majesty of the Seas, and Empress of the Seas also leaving the fleet, the company is leaner. Yet, it is still expecting various vessels to be delivered over the next 24 months. Expected to arrive are:
- Odyssey of the Seas
- Silver Dawn
- Wonder of the Seas
- Celebrity Beyond
For 2021, Royal Caribbean says it is reluctant to offer insight into where things might be heading. The lack of information from the CDC, the ongoing pandemic, and a very fluid situation worldwide mean that we can only hope and see where we will be in three months. We might be seeing more postponements, or we might be seeing ships sailing from US ports once again.
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