By Jonathan Levin (Bloomberg) —
Cruise shares advanced after the U.S. Centers for Disease Control and Prevention outlined a new path to the resumption of voyages.
According to the new guidance in a letter to companies on Wednesday, ships can return to U.S. waters with paying customers if 95% of guests and 98% of crew are vaccinated, bypassing a previous requirement for starting with trial voyages, according to a summary provided by a person with knowledge of the matter, who asked not to be named discussing private communications. The letter was previously reported by USA Today.
Royal Caribbean Cruises Ltd. rose as much as 5.7% to $92.45 in New York trading. Carnival Corp., the industry market-share leader, rose as much as 4.8%, and Norwegian Cruise Line Holdings Ltd. advanced as much as 7.1%.
On Thursday, Royal Caribbean alluded to the letter in its quarterly business update, saying the message had addressed some of the company’s “uncertainties and concerns.” Royal Caribbean said it now sees a pathway to sailing from the U.S. again during the Alaska cruise season, which runs from roughly May to September.
The CDC didn’t immediately respond to a request for comment.
The U.S. cruise industry has been essentially banned from operating via U.S. ports since the beginning of the Covid-19 pandemic in March 2020. The companies have recently ramped up lobbying efforts to win approval for a return, arguing in part that the industry was unfairly singled out for the strictest treatment even as other tourism businesses have returned in some fashion.
Technically, the CDC lifted its hard ban on cruising in October, but it replaced it with a checklist for restarting cruises that no operator has yet managed to complete. The industry had previously criticized the conditional sailing order as overly burdensome and out of touch with the new reality since the arrival of Covid inoculations. Florida, where the major cruise companies are headquartered, even sued the federal government to hasten the return of the industry.
But Royal Caribbean said the recent discussions with the CDC have turned more productive.
“They have dealt with many of these items in a constructive manner that takes into account recent advances in vaccines and medical science,” Royal Caribbean said Thursday in its first-quarter business update.
The company reported revenue totaling $42 million, which was slightly better than expected by analysts tracked by Bloomberg.
It said it has started to spend slightly more cash to cover expenses related to restarting the fleet. Royal Caribbean also noted that cumulative advanced bookings for the first half of 2022 are “within historical ranges and at higher prices” to its 2019 pre-pandemic baseline.
© 2021 Bloomberg L.P.
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