Carnival boss predicts at least two more tough years for cruise industry
The chief executive of the world’s largest cruise line said the industry is unlikely to return to pre-pandemic levels until at least 2023, in light of extended lockdowns and the reputational fallout from coronavirus outbreaks on cruise ships.
Arnold Donald, chief executive of Carnival Corporation, told the Financial Times that the company’s full fleet could sail by the end of this year, but that after removing 19 of its 107 ships during the crisis, it would need to be more time to recover before crisis income.
Even the relaunch of the entire fleet this year was uncertain, he said: “[It] depends on so many variables, because each destination will have its own level of comfort and the regulations in force. “
Carnival found itself at the center of the crisis in February last year, when the coronavirus broke out on its Diamond princess ship, which has been quarantined off the coast of Japan with passengers and crew locked on board.
Carnival continued to run cruises nonetheless, with new outbreaks on several ships, including Diamond Princess’s sister ship, the Grand Princess, which embarked on a Hawaii cruise 16 days after the first cases were confirmed aboard the Diamond Princess.
Donald defended the company’s decision to continue browsing, arguing that little is known about the virus at this point. “The Diamond Princess was finished in Asia, halfway around the world. . . and even there people didn’t really understand the dynamics of what was going on.
But, he admitted, the industry will now have to work harder to attract customers who have never been on a cruise before.
Carnival currently organizes a limited number of crossings in Europe and Asia, some of which leave at sea and return without stopping in ports.
The biggest obstacle to restarting once regulators give the cruise lines their approval is firing its 90,000 employees on the ships, Donald warned. It’s a process that could take up to 45 days given the various travel restrictions and international quarantines, he said.
But the industry is in desperate need of getting back to business and rebuilding badly damaged balance sheets. The carnival raised a total of $ 23.5 billion in debt and equity since March of last year to fund cash outflows of about $ 600 million per month.
Donald did not rule out further capital increases, but said the company has funds to carry it through to 2022, even without any income. She also took precautionary measures such as postponing new ships and cutting executive salaries and dividends.
In its latest business update, Carnival revealed a net loss of $ 2.2 billion for the three months ending late November and said it has $ 9.5 billion in cash. He had $ 2.2 billion in customer deposits for future vacations, the majority of which was credit for canceled trips.
The new bookings are largely due to repeat customers, who take an average of one trip once every two years, Donald said.
Regulators have hesitated to allow the industry restart. This week, the UK announced that cruises could resume in its waters from May 17, but in the US, the largest market, authorities have yet to decide and are considering tough rules such as laboratory tests on board.
Donald said his “only request” to authorities was that there were “no undue restrictions, constraints or disadvantages placed on the cruise industry compared to the rest of travel and tourism.”
So far, four cruise operators have said passengers will need to have been vaccinated.
Donald said such a move would be premature for Carnival given the large age range of its customers.
He added, however, that mandatory vaccination could be a policy for some trips for older customers.