The coronavirus has hit many industries significantly hard; however, the cruise industry has been hit with a triple whammy. Not only are most people strapped for cash in the wake from COVID-19, the unknown length of travel restrictions leave the cruise industry wondering how long they can survive before drowning in debt. Adding to the impact, the U.S. Center for Disease Control and Prevention mandated, at the end of March, a no-sail order for ships with more than 250 passengers and crew for an indefinite length of time.
How Long Can Cruise Lines Last Without Passengers?
Carnival Corp, Norwegian Cruise Line Holdings, and Royal Caribbean Cruises have all been staying afloat, as far as their stock rating is concerned. However, with debt obligations and operating expenses, all three are struggling already.
Carnival Cruises projects they can last until the end of 2020 before needing to liquidate assets further. Norwegian Cruise Line has about 10% of the debt and operating costs of Carnival, leaving them in a much better position to stay open through the end of 2021 without further liquidating.
Royal Caribbean is spending about $330 million a month on operating costs. If they are not allowed to open until 2021, they will most likely need to start liquidation assets to raise money for future expenses. Until then, they are reportedly laying off employees.
Stock Prices of Cruise Liners
As of May 15, stock prices now compared to January 17, 2020:
- Royal Caribbean: down to $37.45 from $135.05
- Carnival Cruises: down to $12.75 from $53.15
- Norwegian: down to $10.92 from $59.65
Benzinga, E. B. (2020, May 15). Analyst: Here’s How Long Carnival, Norwegian And Royal Caribbean Can Last Without Revenue. Yahoo. https://finance.yahoo.com/news/analyst-heres-long-carnival-norwegian-144105979.html
Morris, M. (2020, May 14). For cruise lines, ‘2020 is a wasted year.’ The CEO of Norwegian Cruise lays out when the industry could make money again. Business Insider. https://www.businessinsider.com/ceo-of-norwegian-cruise-line-talks-timeline-to-profitability-2020-5