Norwegian Cruise Line Withdraws Forecast

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April 27, 2020
Norwegian Escape. File Photo. Credit: Meyer Werft
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April 27 (Reuters) – Norwegian Cruise Line Holdings Ltd on Monday warned of a quarterly loss and withdrew its 2020 forecast, as the cruise operator struggles with the suspension of all voyages through the end of June due to the coronavirus crisis.

The pandemic has halted international travel and effectively shut down the cruise ship and airline industries, with companies now bleeding cash and scrambling for new funds to ride out the slowdown that could last longer than expected.

Shares of Norwegian Cruise and rivals Carnival Corp and Royal Caribbean Cruises have taken a hit in the past few months as ships remain docked at ports and people wary of taking trips in the future.

The cruise liners are also not eligible to receive funding under the coronavirus stimulus bill since they were not incorporated in the United States, adding to further woes for the companies.

Norwegian Cruise withdrew its forecast for the first quarter and the rest of the year, but said it expects to report a loss for those periods. Royal Caribbean has also withdrawn its forecast, while Carnival, which operated two of the virus-stricken cruises, has predicted an annual loss.

Shares of the Miami-based Norwegian Cruise rose about 9%, while those of Royal Caribbean and Carnival were up about 8%. The stocks have lost about three-quarters of their value so far this year.

Norwegian Cruise said it would cut $515 million in spending to boost its cash reserves and estimated cash burn of about $110 million to $150 million per month as suspension of its three brands continue.

The company, which had about $1.4 billion in cash and cash equivalents at the end of March, said on Monday it had $1.8 billion of ticket sales as of March 31, that includes cancellations of about $850 million through June 30.

Despite growing cancellations, Chief Executive Officer Frank Del Rio, was optimistic about future demand, echoing Carnival’s CEO Arnold Donald who has predicted strong 2021 bookings.

“We believe the disruption to the travel industry, while swift and severe, will eventually subside,” Del Rio said.

Norwegian Cruise said booking trends indicate demand for cruise vacations for 2021 is essentially flat, although at lower prices. (Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)

(c) Copyright Thomson Reuters 2019.
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