Carnival loses $4.4 billion, as cruise lines see little reopening relief in sight

by Juliana Radek

Two Carnival cruise ships, the Miracle and the Panorama, sit at anchor in the Port of Long Beach, Calif., on April 13, 2020.TIM RUE—BLOOMBERG/GETTY IMAGES

As the pandemic and its near-total shutdown of leisure travel continues to ravage the cruise industry, the world’s largest cruise company is leaking floods of cash.

Carnival Corp. lost $4.4 billion in the quarter ended May 31, including a $2 billion loss from selling off some of its cruise ships, the Panama-based company said Thursday. With almost all of its operations on hold since March, the company eked out $700 million in revenue—an 85% plummet from $4.8 billion a year earlier.

But the pain is far from over: Even as the company plans to accelerate the sales of more of its enormous floating hotels, Carnival says it expects to burn an average of $650 million per month for the rest of 2020. It previously was burning about $500 million every month, according to analyst estimates.

ruise companies were some of the earliest businesses to feel the effects of the global COVID-19 pandemic—and to draw widespread criticism for their lumbering response to it. Carnival, which operates Princess Cruises as well as Holland America and its eponymous brand, was at the center of early COVID-19 outbreaks on its Grand Princess and Diamond Princess ships. Now the company is facing passenger lawsuits and a U.S. House of Representatives probe into its handling of the early crisis.

Compounding their financial pain, Carnival and its top competitors were also left out of the U.S. federal stimulus package designed to throw American businesses a lifeline. While the major cruise operators all have headquarters in Miami, they are technically incorporated overseas, in a long-standing arrangement that allows them to avoid paying U.S. federal income tax on most of their profits.

Carnival CEO Arnold Donald in April reaffirmed his company’s intention to remain incorporated abroad. But now he is scrambling for other financing: His company has raised $6.6 billion in debt and stock, completely tapped its $3 billion revolving credit facility, deferred other debt payments, and is selling off assets. Carnival said Thursday that it has preliminary agreements to sell another six ships in the next 90 days, and is working to sell more ships and non-ship assets. The company says it had $7.6 billion of available liquidity by the end of May.

Carnival had 104 ships in its fleet at the end of its 2019 fiscal year, with 17 additional ships, including planned replacements for existing vessels, on order through 2025. (The company said Thursday that it expects delays in the delivery of four of those ships, which previously had been scheduled to be constructed before October.)

Those measures may help Carnival stay afloat until passengers are able to reboard its ships—although it has become increasingly unclear when that will be. While the company had previously said it might resume some cruises on Aug. 1, Donald has backed away from that hope in recent days.

“I wish I could give you a date, but we can’t, because it’s a regulatory matter,” Donald told travel website The Points Guy in an interview this week.

The U.S. Centers for Disease Control and Prevention in April extended a “no-sail” order for cruise ships through at least July 24. But industry members seem to anticipate further regulatory delays; this week, Norwegian Cruise Line Holdings said it would not resume cruise operations before October.

On Thursday, Carnival did not specifically address its previous Aug. 1 prediction, but said it “is unable to definitively predict when it will return to normal operations.”

In the meantime, Carnival ships aren’t entirely without passengers, however unwilling they may be. The pandemic-related shutdown of cruising stranded more than 80,000 Carnival employees at sea, on board ships, until they could be repatriated to their home countries.

Employees across all cruise companies have reported grim and sometimes COVID-infected conditions while they have been trapped at sea. By mid-May, more than 578 crew members had contracted COVID-19 at sea, and seven had died, the Miami Herald reported; others have reportedly died by suicide.

On Thursday, Carnival said it had repatriated approximately 60,000 cruise-ship employees to more than 130 countries, either by sailing them home or by chartering flights. Another 21,000 employees will be repatriated by the end of June, according to Carnival, which added that it is “focusing on the physical and mental health” of employees “experiencing extended stays on board.”

That includes giving employees access to “fresh air and other areas of the ship,” as well as movies, Internet, and counseling services. The company also said it is “providing most shipboard team members with single occupancy cabin accommodations, many with a window or balcony.”

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32 comments

Buege Ladge August 5, 2020 - 8:33 am

Other side of the world ain’t balance

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Emma Green August 5, 2020 - 12:19 pm

Loyalty personnel should be highly compensated

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Slanky Podomuv August 5, 2020 - 2:20 pm

Slot should be given out to responsible employees

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Jeremy Young August 5, 2020 - 6:16 pm

Nagging on a point in other to resolve out of debt

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Vincennes Marcela August 6, 2020 - 3:52 pm

Things should be fixed as soon as possible

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Jack Goldstien August 6, 2020 - 10:45 pm

It weird been in debt

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Jeremiah Walsh August 7, 2020 - 9:14 am

Ships can also be sold to pay off debts as proposed

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Frank Rodney August 7, 2020 - 12:52 pm

Well…debt can come in but will be fix also

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William Taylor August 7, 2020 - 11:22 pm

Government should invent helps to eradicate debts

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Slity Jill August 8, 2020 - 10:56 am

Carnival debt shouldn’t have been up to that but pandemic hits it up

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Danny Mandela August 8, 2020 - 3:23 pm

Going to figure out way out

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Patrick Hatway August 9, 2020 - 8:05 pm

More loans should be awarded to avoid debt

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Frank Anderson August 12, 2020 - 10:26 am

Employees should report whatever that
causes inconvenience them

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Kate Adams August 12, 2020 - 12:30 pm

Donalds back up should help at least

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Randy Hershberg August 13, 2020 - 7:54 am

Corona virus caused more damages

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George Kurgashvili August 14, 2020 - 12:01 am

Viruses almost cruise down everything

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Alfred Tillion August 14, 2020 - 5:12 am

Carnival crisis almost shutdown

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Richard Brown August 14, 2020 - 10:56 pm

Man must be able to figure out how to get out of how to fix all things out

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Dan Ford August 16, 2020 - 1:59 pm

Gotta make it up when one is in debt

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Jorgen Hans August 16, 2020 - 3:39 pm

Working together in pandemic to get rid of debt in upbringing and provision

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Laker Adams August 17, 2020 - 8:40 am

Vowing to help out at all cost

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Slava Rubinski August 17, 2020 - 2:00 pm

Business can fall and probably raise if one persist

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George Manson August 18, 2020 - 6:08 pm

Pandemic crisis wanna whelm

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Bronny raw August 18, 2020 - 8:38 pm

Carnival debt can be erase only if well influential comes for their aids

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William Perth August 19, 2020 - 7:09 am

I could have interest in reducing debts if not of pandemic

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Hannah August 19, 2020 - 7:28 am

The looses can cause a company or result it been drained in debt

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Peter Cold August 19, 2020 - 7:32 am

Employees should be free in other to access more things also

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Daniel Shaw August 19, 2020 - 8:02 am

Viruses almost cruise down everything but should not have given any good chance

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Sunny Osborne August 19, 2020 - 8:24 am

The mentioned debt is high

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Victor Gurrobich August 19, 2020 - 8:36 am

Things can be change at any point in time to wipe off the debt

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Louis de lupon August 19, 2020 - 2:30 pm

Ships selling…… I think there should be a way out of getting out of debt

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Michael Row August 20, 2020 - 2:07 pm

Government will definitely help with resources

Reply

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