A second Carnival cruise line pushes off its sailings until mid-December. This makes the current rough for getting back on track in 2021.
We are more than halfway through 2020 and cruise companies are running out of days to check off. Carnival’s Holland America is announcing this week that it is suspending all sailings until at least mid-December. It will now be following another Carnival-owned line, Princess Cruises, in delaying operations until December 15th. There is one good thing- pushing the date would put each line in a position to cash in on lucrative year-end holiday cruises, if passengers can believe the new dates are set.
Covid-19 has thrown a wrench in everyone’s plans- especially the travel industries. Every plan is different- and tends to change day-by-day. Carnival, Royal Caribbean, and Norwegian Cruise Line fleets have eyes to return in November, but others are planning even sooner. Carnival intends to restart its AIDA line for sailings originating in Germany in four weeks. However, the most recent trend for these major cruise lines is putting out statements about pushing back restart dates. The cruise lines have done well in consolidating their liquidity since the interruption 5 months ago, it is concerning to seem them straying further away from getting back to business.
The Boats are Leaking…
Holland America is a small part of Carnival, and it was not showing any growth before the recent news. The cruise line announced that it would be selling 4 of the smaller ships in its 14-vessel fleet.
Holland America is not the only line shrinking, the entire industry seems to be as well, as the demand for cruise line has been waning. Some companies have considered unloading their underperforming ships while delaying shipyard deliveries of a new order. Whether this industry takes on the seas within this year or some point in 2021, it will be a smaller fleet. However, this may not be a completely negative decision, especially since empty ships are profit killers, with high fixed costs that need to be divided among its revenue-generating passengers.
Here is some good news- the larger players are not going to go away. Carnival, Norwegian Cruise Line, and Royal Caribbean have more than a year of liquidity despite their recent rates of cash burn. As a person who bought shares of Norwegian- this makes me feel better. Once there is a vaccine for Covid-19, these players can bounce back, it will just take a little more time than I personally anticipated. Things may turn around quickly the moment sailings begin (with the plan still in November). There will be data from the smaller markets that return to business. If there are no more outbreaks aboard those sailings, there is confidence for a takeback.
Safe Sailing Traders!
Remember: A Capitan knows his ship!
