Amid a US $2.2-billion loss for the fourth quarter of 2020, and a flood of new cruise ships due for delivery this year, Carnival Corporation has said it plans to sell off more tonnage and delay deliveries in 2021.
Carnival Corp’s plans to sell at least four ships and delay all its scheduled new cruise ship deliveries in 2021 comes despite strong signs of demand for cruises in future, with 2022 bookings exceeding the numbers seen in 2019.
On the company’s fourth quarter earnings call, CEO Arnold Donald said the forward booking trends confirm the underlying demand for cruising that will support the company’s resumption of service.
Also on the call was David Bernstein, Executive Vice President and CFO of Carnival Corp. He said that 60 percent of the forward bookings are new (in addition to passengers booked with future cruise credits) and that 45 percent are new to the nine brands operated by the company.
However, in the short-term, Carnival’s need to reduce costs and control cash flow remains acute. The company said it has raised US $19-billion in cash and equivalents since the industry shut down in March due to the coronavirus, and has US $9.5-billion on hand.
Donald said that this is sufficient to sustain the company through 2021 in case of a non-revenue environment, but its monthly costs are expected to increase from US $500-million per month to US $600-million as it prepares part of its fleet for a return to service.
The company’s total debt, meanwhile, now stands at US $27-billion. However, Bernstein said that by delaying newbuild deliveries through 2022 and 2023, the company will have just one ship slated for delivery in 2024 and another in 2025.
This will result in reduced capital expenditures in those years, allowing the company to pay down debt.
Neither Arnold nor Bernstein revealed which ship would be the single one delivered in 2021, although Holland America Line‘s Rotterdam is the closest to completion.
Carnival Corporation was meant to take delivery of five ships this year, including AIDAcosma, Seabourn Venture, Costa Toscana, and Discovery Princess. A further ten ships will be delayed through 2024.
Carnival also did not reveal which additional vessels will be sold out of the fleet. They are likely to be the oldest and smallest of the ships across the nine-brand fleet, as Carnival seeks to enhance per-passenger revenue.
“Since the pause in guest operations, the company has accelerated the removal of ships in fiscal 2020 which were previously expected to be sold over the ensuing years,” Carnival said in a statement.
“The company now expects to dispose of 19 ships, 15 of which have already left the fleet. In total, the 19 ships represent approximately 13 percent of pre-pause capacity and only three percent of operating income in 2019,” it added.