At the very beginning of the pandemic, we looked at how the virus was affecting the cruise industry in our post dated March 21 titled “Rough Seas Ahead for All.” We first saw itineraries being altered and then watched as ports were closed. Finally, we witnessed instances of passengers being forcibly quarantined onboard several vessels - all part of community and country efforts to curb the spread of the coronavirus. Shutdown was inevitable in order to keep passengers, crew and ports safe and healthy. Viking Cruises was first to make the call on March 12, cancelling all river and ocean sailings across its global fleet of 74 ships. Princess Cruises swiftly followed by first pausing operations and soon cancelling all sailings. The rest of the industry quickly followed suit.
Since then, several cruise lines returned to sailing with very unpleasant results. The American owned, US-flagged, small-boat cruise line UnCruise Adventures confirmed in August that a guest received a phone call from the State of Alaska with notification of a positive COVID-19 test while onboard. The vessel went directly to Juneau where all guests and crew were placed in a local hotel and required to quarantine. In Norway, 2 different cruise operators experienced outbreaks of COVID-19. Expedition line Hurtigruten suspended most of its operations after dozens of crew members and several passengers were sickened following 2 different sailings. And the SeaDream Yacht Club also placed its passengers and crew under quarantine once they learned a guest from a previous sailing had tested positive for the virus. And across the world in the South Pacific, the French Polynesia-based Paul Gauguin Cruise Line reported one passenger onboard an August sailing tested positive. The cruise was cancelled and all passengers were confined to their cabin 3 days after setting sail from Tahiti.
While airlines continue to fly (reduced schedules not withstanding) and most hotels have reopened (albeit with reduced occupancy), the cruise line industry’s been suffering in dry dock ever since. Why is cruising so different from flying or staying in a hotel? Outbreaks of infectious diseases frequently happen on cruise ships because people spend time in very close proximity, often with travelers from different countries. The current scientific evidence suggests that cruise ships pose a greater risk of COVID-19 transmission than other settings because of the high population density aboard ships which are typically more densely populated than many cities or most other living situations. While this is but one contributing factor, data from the US Centers for Disease Control and Prevention (CDC) shows that decreasing passenger numbers does not end transmission. Other contributing factors include crew living and working in close quarters, which may spread the virus from one voyage to the next, and infected persons traveling on cruise ships between countries.
What’s been the affect on the biggest companies in the industry? Carnival Corporation is the largest cruise line in the world operating more than 100 vessels sailing under some of the most well-known brand names on the seas. These include, among others, its namesake as well as Cunard, Holland America, Princess and Seabourn Cruise Lines. The company declared a loss of $4.4 billion in the second quarter with total revenue amounting to only $0.7 billion, much lower than the $4.8 billion reported in the prior year. Carnival ended the second quarter with $7.6 billion in available liquidity, including $475 million related to cruises during the second half of the year. All cruises were in a pause mode for the majority of the quarter. Their earnings release stated, “The longer the pause in guest operations continues the greater the impact on the company’s liquidity and financial position."
The Royal Caribbean Group has a total of 62 ships in its fleet and is the owner of 4 global brands, including its namesake and Celebrity Cruises, Silversea and Azamara. The company reported a $1.6 billion loss for the recent quarter compared with net income of $472.8 million during the same period last year. At the end of the quarter, they had liquidity of approximately $4.1 billion in the form of cash and cash equivalents. While they’ve reduced operating costs by decreasing sales, marketing and administrative expenses, Royal Caribbean’s monthly cash burn was still between $250 to $290 million per month during this prolonged operational suspension - way higher than even most airlines. Looking ahead, Group Chairman and CEO Richard D. Fain stated, “Our teams are working tirelessly to return to service soonest and doing so by developing new health and safety protocols to protect the well-being of our guests, crew and destinations we visit.”
Norwegian Cruise Line Holdings is a Miami-based company that operates that familiar line as well as Oceania Cruises and the Regent Seven Seas brand. Those lines have a combined fleet of 28 ships with nearly 60,000 berths among them. The company reported a second quarter loss of $715.2 million compared with a profit of $240.2 million during the same quarter of 2019. Revenue decreased to $16.9 million compared with $1.7 billion during the same period last year due to the complete suspension of voyages in the reporting period. As of June 30, the company’s total debt position was $10.3 billion and their cash and cash equivalents were $2.3 billion. “In recent weeks, we have taken further action to bolster our liquidity position in response to the COVID-19 global pandemic, including our highly successful $1.5 billion gross triple-tranche capital raise in July, which we believe positions us to withstand a scenario of prolonged voyage suspensions,” declared Frank Del Rio, President and CEO.
Cruise Lines International Association (CLIA) is the world’s largest cruise industry trade association. They claim the cruise industry generates over $150 billion in worldwide economic activity and supports nearly 2 million jobs. For every 1 per cent drop in cruising that occurs globally, CLIA says up to 9,100 jobs are lost and each day of the suspension results in the loss of up to 2,500 jobs worldwide. They‘ve gone on record estimating that from mid-March (when the suspension of cruise operations began) throuh the end of September, the worldwide impact would be a loss of $50 billion in economic activity, 334,000 jobs and $15 billion in wages. CLIA and its cruise line members recently adopted several mandatory core elements amounting to a strong set of health protocols to be implemented as part of a phased-in, highly controlled resumption of operations. Informed by leading scientists, medical experts and health authorities, highlights of these elements include 100 per cent passenger and crew testing, mask wearing, distancing, revised air management and ventilation strategies, increased medical capabilities, and strict shore excursion protocols.
Cruise ships with the capacity to carry 250 passengers or more are still barred from sailing in US waters - for at least another month. On September 30, the CDC extended its “No Sail Order“ through the month of October. The agency press release stated, “Recent outbreaks on cruise ships overseas provide current evidence that cruise ship travel continues to transmit and amplify the spread of SARS-CoV-2, the virus that causes COVID-19.- even when ships sail at reduced passenger capacities-and would likely spread the infection into US communities if passenger operations were to resume prematurely in the United States.” There’ve been 3,689 confirmed or suspected cases of coronavirus on cruise ships reported to the CDC since March 1 and at least 41 people have perished. The challenges described in the “No Sail Order” highlight the need for further action before cruise ships can safely resume passenger operations in American waters.
So, is there a definitive answer to the question we raised in the headline? No, but I do believe it will depend upon the effective global distribution of a safe and efficacious vaccine. As mentioned in one of our earlier posts, we were booked on a 7-night Uniworld River Cruise through the Bordeaux wine region of France that was to depart in May. Of course, that cruise was cancelled and we’ve since been re-booked for May of next year. Will we sail? None of us knows for sure but like countless other “cancelled cruisers” we remain cautiously optimistic.
Until next time…stay safe.
Bring on the vaccine ...!
Another tragedy in this world wide pandemic. Thank you once again for putting it into perspective. ❤️