Norwegian Cruise Line Swings to Quarterly Loss

Mike Schuler
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May 14, 2020

FILE PHOTO: Cruise ships are seen docked at Miami port as the tourism industry is affected by the spread of the coronavirus disease (COVID-19), in Miami, Florida, U.S., March 26, 2020. REUTERS/Carlos Barria/File Photo

reuters logo May 14 (Reuters) – Norwegian Cruise Line Holdings Ltd swung to a quarterly loss on a $1.6 billion impairment charge as the COVID-19 pandemic brought the global cruise industry to a virtual standstill.

Underscoring the hit, rival Carnival Corp also announced on Thursday layoffs, furloughs, reduced work weeks and salary cuts to stay afloat.

Shares of Norwegian, Carnival and Royal Caribbean Cruises Ltd, which have already lost about three-quarters of their value this year, fell more than 8% in early trading, also tracking weak broader markets.

The three companies, which account for a chunk of the global cruise industry’s revenues, have been hammered by no-sail-orders to contain the spread of the coronavirus, with extended port quarantines in Japan and California due to deadly outbreaks on some ships adding to the worries.

With ships docked at ports and major players left out of a $2.3 trillion U.S. stimulus package for troubled companies due to their incorporation outside the United States, cruise operators have pledged assets to raise funds to stay afloat.

Norwegian Cruise said it was well positioned to withstand over 18 months of voyage suspensions

The company posted a net loss of $1.88 billion, or $8.80 per share, for the three months ended March 31, compared with a profit of $118.2 million, or 54 cents per share, a year earlier.

Excluding one-time items, the company reported a loss of 99 cents per share, while analysts on average had expected a loss of 50 cents, according to IBES data from Refinitiv.

SETTING SAIL AGAIN

Norwegian and Carnival both said there was demand for cruises later this year and early next year, even as there is no clarity over when cruises may set sail.

The three cruise operators have suspended trips at least until end of June and began offering refunds or credit for future bookings as the pandemic spread.

Carnival said on Thursday majority of guests affected by cancellations want to sail at a later date, with fewer than 38% requesting refunds.

Norwegian said slightly over half of the guests who have had their voyages canceled have requested cash refunds as of May 11, adding that there is demand for cruises starting in the fourth quarter and accelerating through 2021.

“It is clear there is tremendous anticipation for a return to cruising,” Carnival’s Chief Executive Officer Arnold Donald said in a statement.

(Reporting by Nivedita Balu in Bengaluru; Editing by Sriraj Kalluvila)

(c) Copyright Thomson Reuters 2019.

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