After initiating a series of credit facilities, securing a US $400-million investment and launching new shares, Norwegian Cruise Line Holdings says it is now in a position to weather the cruise shut down for a full year.
When the global cruise industry was first brought to its knees by a full shutdown of activities in March, there was concern that the world’s third-largest cruise company might be most vulnerable.
Now, however, it has successfully secured over US $2 billion of additional liquidity, and while the shutdown is costing it up to US $150-million a month, it has more than enough to weather the disruption.
It secured the additional capital through an investment of US $400-million from L Catterton and through the launch of a series of capital markets transactions, led by Goldman Sachs, which raised approximately US $2 billion.
Norwegian has also taken extensive measures to cut costs with US $515 million of capital expenditure reduced by deferring planned 2020 non-newbuild capital expenditures. It has also laid-off staff and placed others on unpaid leave.
Contingent on completion of the transactions, the company expects to have approximately $3.5 billion of liquidity.
“We have also identified various projects and initiatives to reduce our ship operating costs and selling, general and administrative expenses, which we expect will result in reduced cash outflows and cost savings,” the company said in a statement.
“We are undertaking meaningful reductions in ship operating expense including food, fuel, insurance, port charges and reduced crew manning of vessels during the suspension, resulting in lower crew payroll expense,” it added.
During an interview Friday with USA Today, Norwegian Cruise Line Holdings CEO, Frank Del Rio, said he expects the cruise industry to bounce back relatively quickly once travel restrictions are eased and said the new capital puts NCL in a much stronger position.
“It’s a very long runway, and a heck of an insurance policy,” he said.
Del Rio added that while Coronavirus concerns will inevitably impact the cruise experience (self-serve buffets are likely to go, for instance), the basics will always keep cruisers coming back.
“All the basic elements if cruising will always be there – the great value, the multiple destinations, the great dining,” Del Rio said.