Royal Caribbean Group released its financial results for the third quarter today. The corporation owns Royal Caribbean Cruises, Azamara Cruises, Celebrity Cruises, Silversea, and owns 50% through a joint venture of both TUI and Hapag Lloyd.
The results were eagerly anticipated. The successful Company struggles through what is already the seventh month of a No-Sail-Order.
In the meantime, three ships from TUI Cruises, two from Hapag Lloyd, and one from Silversea have resumed sailing in Europe with limited numbers.
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Royal Reports Huge Losses
As was expected, the Company reports huge losses for the third quarter. An Adjusted Net Loss of $(1.2) billion for the third quarter and a cash burn rate between $250 million and $290 million is putting a heavy load on the Company. Even a resumption of sailing will not bring this down soon.
The Company expects to see an increase in the cash burn rate once the No-Sail-Order has been lifted. This is due to the financial burden restarting the ships will bring.
A few examples would be incremental spending as it brings the ships out of their various levels of layup, returns the crew to the vessels, takes the necessary steps to ensure compliance with the recommended protocols, and restarts its sales and marketing activities.
Positive News on The Horizon
It is certainly not all doom and gloom for Royal Caribbean. As the eyes of the cruising world are turned towards the CDC, CEO Richard Fain has been increasingly optimistic about the order being lifted this week, while reports are out that Royal Caribbean is mobilizing its crew around the world.
Furthermore, the line has been successful in operating ships in Europe with TUI and Hapag Lloyd. It, therefore, expects to restart its global cruise operation in a phased manner.
Royal Caribbean can also boast positive numbers on bookings; these reflect the level they were on in 2019. The numbers are even slightly elevated if the previous year’s bookings, which have been rebooked, are included.
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Healthy Sail Panel Reflects Well On Royal Caribbean
Recently, the Company received approval to sail from the Singaporean Government. As a result, the Company anticipates that Quantum of the Seas, a ship from the Royal Caribbean International fleet, will resume cruising from Singapore in December 2020.
These initial cruises will occur with reduced guest occupancy, modified itineraries, and enhanced health protocols developed in collaboration with governments and health authorities.
In June 2020, the Company formed a panel of globally recognized medical and scientific experts named the Healthy Sail Panel (“HSP”). The panelists have identified 74 recommendations across five focus areas.
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These will be used as public health guidance and preventative measures relating to travel on cruise ships. Richard D. Fain had this to say about the HSP:
“The work of the Healthy Sail Panel has been thorough and comprehensive. We are grateful for its enormous dedication and passion, which has resulted in what has quickly become the seminal document in this arena.”
“We are also grateful for the time the CDC and their observers have spent on this important topic with the Healthy Sail Panel; we understand the importance of getting this right and are preparing to put these plans to the test with a gradual and methodical return to service in the near future.”
So while it’s certainly not all positive for Royal Caribbean, there are undoubtedly positive points to be had from the financial results released today. In only a few days, we will see if that hope and positivity continue after the CDC’s upcoming decision.
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