With cruising looking increasingly unlikely to return in any major way
until 2021, which lines have gone bust, look at risk or are well placed to
survive with no cruises or income? In May, not long after the shutdown began,
Norwegian Cruise Line group caused an enormous rumpus when
they announced that they saw a real fundamental risk
that they may not survive the shutdown. So what's happened? What's
gone on, and what should we be expecting, particularly
of the really big groups? The Carnival corporation group, which of course covers
many lines including Carnival, Seabourn, Holland
America, Princess, Aida, Costa and many more. The Royal Caribbean group,
which of course includes Royal Caribbean, Celebrity, Azamara and Silversea, and Norwegian
Group which includes Oceania and Regent Seven Seas.
So far there are five cruise lines that have actually gone
bankrupt, all of them have tended to be smaller more
independent cruise lines. So who has actually gone bust? One of the Royal
Caribbean partnerships went bankrupt fairly early on, and this
was Pullmantur, which was a spanish based cruise line.
They went into insolvency and their three ships, which were originally Royal
Caribbean ships were removed and have been actually been
sent off for scrap. The second big cruise line to go bust
was Cruise and Maritime Voyages, this was a UK
based line which had a number of ships. They didn't own the ships, they leased
the ships. It was a popular cruise line, it was a value cruise line sailing all
around the world and very popular particularly with the UK
and Australians. Birka cruises went bankrupt fairly early on, and they really
focused on cruises particularly around the Swedish area
and Europe. FTI cruises, which was a German cruise line catering mostly for
German passengers and really focusing on Europe and the
Caribbean, they also went bankrupt. The first north american based cruise
line to close down is Blout Small Ship Adventures. Blout
small ship adventures also builds ships and they're keeping that
going, but they decided with everything going on they were not going to reopen.
Blout ran a relatively small fleet, and they really
focused on coastal and inland voyages around North America. The cruise lines that have gone bankrupt so far have tended to be
smaller more independent cruise lines without
really deep pockets, or owners with very deep pockets.
There is one major cruise line that at this point in time is looking
fairly at risk, and that is Crystal Cruises. Now Crystal Cruises
is part of Genting Hong Kong, which is a big player
in cruising and they used to be the big shareholder of Norwegian Cruise Line
before they sold that on. They have three key cruise
lines, they have Star Cruises and Dream Cruises,
which are major major players in Asia and they have Crystal Cruises, the ultra
luxury cruise line. Their holding company currently has over
three billion dollars of debt and they stopped payments to creditors
to try and refinance. What they have said in recent days
is that they have had some interest from investors around the Crystal Cruises product
itself, the Crystal Cruises brand itself. The cruise line itself has issued a
statement to travel agents saying they do have a path
to keep cruising, to keep going and they will keep
paying refunds. Significantly though, a number of insurance companies
will not cover Crystal Cruises bookings because there have been these question marks around it.
So, at this point in time, although it looks like Crystal Cruises will survive
it's definitely a cruise line under pressure.
What about the big cruise companies? Certainly in May there was lots of
speculation about those big companies and their ability to survive,
and would all of the brands survive. However I think we can say
with some confidence, that those three big cruise lines
are extremely likely to survive this whole process of pandemic, because of the
way that they've restructured. What's been very clear
is, although a lot of people are down beat on cruising, investors,
lenders and Wall Street do see a clear long-term future for cruising and
the big cruise lines. What you need to bear in mind is, unlike
say airlines or other travel brands, the cruise industry
was able to slash their costs dramatically very
quickly. Pretty much all of their crew are on contracts, so by ending their
contracts or when contracts ended over a hundred thousand or more
crew effectively left the business. They put their ships
into cold lay-up, which dramatically reduced costs. They slashed head office
numbers or shore side, even in places like
the UK they cut their numbers of people working for Carnival
Corporation by about 40 percent. Carnival Corporation since the pandemic
has, according to the Financial Times,
raised over 11 and a half billion dollars. They're currently burning
through around 650 million dollars a month.
Arnold Donald, the CEO, has said they have enough cash
to keep going till at least june 2021 even if there is no cruising.
So I think we can safely say that they are pretty well covered.
The Royal Caribbean group, so that is Royal Caribbean, Celebrity, Azamara and
Silversea, have also been able to raise an enormous amount of
money. They're currently burning through 250 million dollars a month.
However since the start of the pandemic, the Financial Times reports, they have
raised 7.1 billion dollars, and again what
they're saying is they have enough money to keep going as an entity right through
until the middle of 2021 even if there is no sailing and no
income coming in. Norwegian Cruise Line is burning through
160 million dollars a month, and as i mentioned in May they expressed a
lot of concern about the ability to keep going. However
they have managed to raise an enormous amount of money, according to the
Financial Times they have raised 5 billion and this
is going to cover them through to at least quarter 3
2021 - so even longer than the other groups.
So, as we can see, those major cruise lines and those major brands are very
well covered, so unlike the gloomy predictions
cruise lines and cruise companies have not folded en-mass
as many had predicted they would do, because certainly there is a belief that
there is pent-up demand for cruising, cruising will
come back in the long term and so investors are comfortable
giving money to these companies even though they're burning anything between
160 million and 650 million dollars a month. The
money is taking a bet on the long term of cruising. I have regular cruise
updates, so subscribe to the channel so you get alerted
when there are new updates, and why don't you go and watch another one of my
cruise updates right now?