Carnival Corp. Discusses Leaving US Homeports, Rising Sales
Carnival Corporation & plc addressed the possibility that Carnival Cruise Line, initially planning to stick with U.S. ports, might book homeports outside of the country.
Arnold Donald, president and CEO of Carnival Corp., said the April 2 guidance from the Centers for Disease Control & Prevention (CDC) was “not necessarily a workable or practical solution.”
“In terms of whether we would consider sailing or homeporting out of the Caribbean, Carnival is really America’s original cruise line,” he said. “Part of that is the drive-to market capability is access for people. We have 14 homeports in the U.S. and nobody else has anything that.”
He said he’d also prefer to see American ports working again, providing jobs for thousands.
“But if we’re unable to sail then obviously we will consider homeporting elsewhere,” Donald said.
During the quarterly call with financial analysts, Donald was asked if he set a drop-dead deadline at which time Carnival Cruise Line would use overseas homeports if the CDC didn’t allow Carnival to operate in the U.S.
“We don’t have an arbitrary date. I would say it’s sooner rather than later that we might have to announce some additional homeporting outside the U.S.,” Donald said. “We’re kind of holding back on that, but I think it will be sooner rather than later. We are very much focused on working with the CDC and the administration to come up with a solution that works for American workers and the American public. And I think we can. If we all continue to work together, we’ll figure it out.”
One positive sign came April 6 when the CDC first signaled some cruising could return with restrictions by mid-summer.
Donald also was asked when the entire fleets might be back in the water.
“In terms of the overall fleet, we are going to come back staggered, no matter what, and we will be bringing in a few ships of a brand at a time,” he said. “Hopefully, if we were to good to go and destinations were all up and running, and we have all the various itineraries, ideally we’d like to be able to have the fleet fully going by the end of this year and early next year. That’s our aspiration.”
Earlier in the call, Carnival cited huge growth in cruise bookings. The company said bookings for future cruises rose 90 percent in the first quarter of 2021, compared to the final quarter 2020.
Cumulative advanced bookings for the full-year 2022 “are ahead of a very strong 2019, despite minimal advertising or marketing.”
Donald noted that the six of the corporation’s brands have already resumed operations or announced plans to restart this summer with nine ships.
So far:
– AIDA resumed guest cruise operations in March in the Canary Islands.
– Costa expects to resume cruising in May to Italian ports.
– P&O Cruises (UK), Cunard and Princess Cruises will each offer a series of UK cruises this summer.
– Seabourn expects to resume guest cruise operations July 3 sailing from Greece.
– Holland America Line and Princess Cruises are offering land-based vacation options in Alaska through a combination of tours, lodging and sightseeing.
“Throughout the pause we have been positioning Carnival Corporation to return to serving guests an operationally stronger company than we were before,” Donald said. “With an exciting roster of six new, more efficient ships by December and with lower capacity from the exit of 19 less efficient ships, we expect to capitalize on pent-up demand and achieve significant cost improvement from the greater efficiency of our fleet, along with ongoing streamlining of shoreside operations.”
The company reported a U.S. GAAP net loss of $2 billion and an adjusted net loss of $2billion for the first quarter of 2021. However, bookings are soaring as more and more people are getting vaccinated and starting to feel safe to travel.
Total customer deposits as of Feb. 28, 2021, and Nov. 30, 2020, were $2.2 billion, the majority of which are future cruise credits. During the quarter, customer deposits on new bookings essentially offset the impact of refunds provided.
Carnival CFO David Bernstein said the company ended the first quarter with $11.5 billion in cash and short-term investments on the balance sheet.
“At this time, we believe we have enough liquidity to get us back to full operations, and we will be pursuing refinancing opportunities to reduce interest expense and extend maturities,” he said. “We have successfully identified and implemented actions to optimize our monthly cash burn rate and we will continue to do so.”
As the company continues to resume guest cruise operations, it expects to spend more to bring ships out of pause status, return crew members to its ships, and implement enhanced health and safety protocols.