CEO Says Carnival Corp. Has Funding to Survive 2020 and Beyond
Carnival Corp. has taken “decisive and concrete” financial actions that ensure operations through 2020 and beyond, despite the coronavirus pandemic, CEO Arnold Donald said.
“Last week, we raised a net $6.4 billion in funding that included new debt and equity offerings, and that was on top of the previously announced $3 billion that we took on our existing facility agreement,” Donald said in a conference call with cruise and financial journalists. “We’re also reducing, like a lot of companies, capital expenditures and operating expenses across our company. We’re working hard to seek additional liquidity options.
“Together these important moves provide sufficient liquidity to fund our operations through the end of the year and beyond, potentially without any significant revenue coming in,” he said. “We hope that’ll prove to be unnecessary, but we need to be prepared for the worst.”
When asked how exactly the cruise industry will relaunch, he said it would depend on which destinations reopen and whether travel restrictions are eased or lifted.
A brand like Carnival Cruise Line, for example, might initially benefit because a number of its ships operate from U.S. homeports that are easily reached by car. Carnival’s nine brands are taking bookings for later in the year and into 2021.
“We do have a number of brands that are very reliant on airlift to get guests to the embarkation point, so we’ll have to wait and see because we don’t know which destinations will open up when. … Until we see more movement it’s hard to predict exactly what form and shape it will take.”
When asked if cruise companies acted quickly enough in response to the fast-spreading coronavirus, Donald said the cruise industry voluntarily paused operations on March 14 before other businesses closed and social distancing took hold.
“Cruise ships are not the cause of the virus nor are they the reason for the spread in society,” he said, adding that regulations require the industry to report illnesses. “We report; we provide all the information. Airport terminals, not so much. Subway stations, not so much. Restaurants, not so much. Hotels, not so much.”
Cruise ships do have health protocols in place, with health screenings before boarding, hand sanitizer stations, signs urging hand-washing, and onboard medical clinics. Once the coronavirus began to spread, cruise lines strengthened screenings and did temperature scans.
The industry works with the CDC, WHO and other health authorities and will comply with new protocols being developed, he said.
“Long-term our business model is secure. In the near term, once we start sailing it’s going to be different because I doubt seriously all destinations will open simultaneously,” Donald said. “There’ll be different protocols and regulations and so on in one place versus another. We’re going to stay in compliance with all of those. I’m sure they will be some changes to the business model in the near and short term. Longer-term, I think as the world overcomes the virus and it becomes background noise or non-existent, we’ll return to the great experiences we were enjoying before.”