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Norwegian Cruise Line says it believes the current shut down of the cruise industry will subside and it is continuing to see demand for future voyages. The company added in a financial update statement on its response to the coronavirus pandemic that while it is burning at least $110 million a month it has taken sufficient measures to ensure liquidity.
“We believe the disruption to the travel industry, while swift and severe, will eventually subside. Our guests continue to demonstrate their desire for cruise vacations as we continue to experience demand for voyages further in the future across our three brands,” Frank Del Rio, president and chief executive officer of Norwegian Cruise Line said Thursday “When the time comes, we will be ready to safely resume operations and welcome our loyal guests on board.”
Norwegian Cruise Lines Holding (NYSE: NCLH) operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. It has a combined fleet of 28 ships with almost 60,000 berths, and itineraries covering 490 destinations worldwide.
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Positive Booking Outlook
The statement said that prior to the outbreak of COVID-19, 2020 was off to a strong start with all three of the company’s brands entering the year with record bookings at higher prices than the previous year with ships sailing full despite a 7% growth in capacity.
However, as a result of the global pandemic and the CDC no-sail-order, demand has been soft while cancellations have gone up. While there have been various reports that cruise bookings are in fact up for 2021 with companies offering heavy discounts, Norwegian said that as of April 17, bookings for 2020 were “meaningfully lower” than last year with prices down in low-single digits, while it described bookings for 2021 as “essentially flat” compared to last year with pricing down mid-single digits.
Taking Action to Combat COVID-19
Norwegian said it had taken proactive measures to mitigate the financial impacts of COVID-19 by conserving cash to preserve liquidity. These measures include reduced operating expenses, reduced capital expenditures and improving its debt profile.
Norwegian Holdings total debt position as of March 31 as $8.6 billion with cash and cash equivalents at $1.4 billion
The company said it estimates its cash burn at approximately $110 million to $150 million per month during the suspension of operations. The sum excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings.
“Our quick action to proactively and aggressively implement initiatives to preserve cash and enhance liquidity in this uncertain and fluid environment puts us in a stronger position to withstand the adverse financial effects of COVID-19,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings.
Resuming Operations
Norwegian said that prior to the suspension of cruise voyages, it had already begun to develop a comprehensive strategy to enhance its health and safety protocols to address the public health challenges posed by COVID-19, including enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing.
The company said it would continue to work with the CDC and other federal agencies, global public health authorities and national and local governments in areas where it operates to take “all necessary measures to ensure the health, safety and security of guests, crew and the communities visited once operations resume.”
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