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heidikay

By heidikay,
in Royal Caribbean International

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The_Big_M

The_Big_M

Posted
Posted

So in other words they lost ~15% of their current share value, for a period when they were only out of operation for only 2/12 weeks i.e. 16% of the period. Imagine what it's like when they're out for the whole period!

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PatMunits

PatMunits

Posted
Posted (edited)

Situation is as transparent as water in Hudson river.

 

My concerns:

  • 11.5% cost of borrowing for 2025 is not cheap at all at the time of virtually zero-interest rates (CUSIP 780153AZ5)
  • RCL is not solid enough to take advantage of the situation and go on an acquisition spree (additional comments such as "cash is king" confirms this)
  • RCL is still concerned about their liquidity and sounds like dilution and asset sales are not yet out of the question
  • They are not being transparent about current situation with reservations with regards to the fact that FCCs have not been fully processed. That there are plenty of cases where future cruises have been booked by TAs with fully-refundable deposits and an understanding that those deposits will be refunded and then the reservations instead will be paid for by FCCs once those become available. Overall future booking numbers therefore are depressed by way more than 10% than RCL is willing to admit.
  • RCL is still in damage-control mode and are not at a stage where they are excited about sailing anytime soon. They have no definitive plan for how exactly they will open.
  • Only sometime next year, when all FCCs are finally get used up it will become transparent to investors what the real loss of customer base is

 

While RCL is stable enough to stay afloat, current shareholders remain in a risky situation due to possible future dilution and even greater realized losses over the next three or perhaps more quarters.

If I was a CFO at RCL then I'd ask for a report from my IT department that would show me the following:

Take all bookings for sailings that are cancelled and will likely get cancelled, group them by passenger names, then subtract future bookings made by those same passengers. I suspect that the overall number may actually show that virtually nobody is has put fresh money into new bookings since lockdown started. As per their own admission, bookings are really only coming from existing royal customers, with an expectation that future bookings will be financed for with FCCs.

 

Secondly, I'd evaluate the option of launching a promotion program where a real discount (vs historical prices) can be offered for future bookings that are fully paid at time of reservation. This may actually be more economical for RCL vs going to investment banks to raise more capital.

 

Third, introduce new cruise-to-nowhere options were the goal is to compete on final price. No port taxes = lower price. Again, this would be temporary, and act as a way to raise cash to get through the current situation.

Fourth, prepare a new marketing campaign where RCL will drive the fact that their health standards outperformed the competition. 

 

Edited by PatMunits
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NavArch64

NavArch64

Posted
Posted

From the SEC filing of May 20 ... 3.3B of current liquidity minus 3.0B cash burn per 12 months minus 0.4B debt repayment end of 2020 equals 100M cash deficit one year from now .... unless cumulative operational net positive cash flows return by then. Simple analysis indicates difficult sailing ahead for RCCL. Probably more liquidity needed in the near future.

 

 

.

 

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Jimbo

Jimbo

Posted
Posted (edited)
14 minutes ago, NavArch64 said:

From the SEC filing of May 20 ... 3.3B of current liquidity minus 3.0B cash burn per 12 months minus 0.4B debt repayment end of 2020 equals 100M cash deficit one year from now .... unless cumulative operational net positive cash flows return by then. Simple analysis indicates difficult sailing ahead for RCCL. Probably more liquidity needed in the near future.

 

 

.

 

Doesn't sound like much when you put it that way..........Only a 100M......................Bryce Harper of the Phillies this year was due $27M himself...............

 

They could sell some drink packages for $18 a day and makeup that 100M in a week

Edited by Jimbo
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bigrednole

bigrednole

Posted
Posted

Well, I sold at $44. I was hoping for a bigger drop this week to buy back in. There are too many unknowns over the coming months that need to be resolved. I don't see any reason for RCL to go up over the next quarter. Having a definitive "We are sailing out of x, y, z starting August 2" would be a start in the right direction. Unfortunately, we don't know that. After that, are they even going to be able to go to other ports? It may be sailings to Key West, CocoCay, and 4 days at sea. Other countries may not be willing to risk opening to 5,000 cruisers for 5 days out of every week. I am booked in November. For my family, I hope this is behind us and we can go. It will be more than 2 years between a good family vacation and they deserve it. 

 

I did notice that my purchase of the photo package mysteriously did not go through on RCL. All onboard "extras" have gone up significantly. If they were being booked completely out I could understand. 

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Baron Barracuda

Baron Barracuda

Posted
Posted
1 hour ago, NavArch64 said:

From the SEC filing of May 20 ... 3.3B of current liquidity minus 3.0B cash burn per 12 months minus 0.4B debt repayment end of 2020 equals 100M cash deficit one year from now .... unless cumulative operational net positive cash flows return by then. Simple analysis indicates difficult sailing ahead for RCCL. Probably more liquidity needed in the near future.

 

 

.

 

That $3B cash burn excludes refunds.  They are currently holding $2.4B in customer deposits.  If current trend of 45% demanding cash refunds continues that will deplete cash by a further $1.1B.

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Ourusualbeach

Ourusualbeach

Posted
Posted (edited)
2 hours ago, PatMunits said:

Third, introduce new cruise-to-nowhere options were the goal is to compete on final price. No port taxes = lower price. Again, this would be temporary, and act as a way to raise cash to get through the current situation.

Currently illegal to operate cruises to nowhere. (From US ports)

Edited by Ourusualbeach
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NavArch64

NavArch64

Posted
Posted (edited)

Of course ... only if they actually pay the deposit refunds. Now we can clearly see why RCCL will delay payment as long as they can. But your point is well taken ... if the 2.4B had to be paid back immediately ... then current liquidity drops to only 0.9B.

 

 

 

 

Edited by NavArch64
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bigeck

bigeck

Posted
Posted
1 hour ago, Blizzard54 said:

I am currently have about 7k in FCC's, pending refunds and deposits.

I guess I am doing my share of funding them.

Look at it from a Scotsmans point of view. 25% extra is a nice little earner. I should start booking and get a free cruise with the extra

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Blizzard54

Blizzard54

Posted
Posted
4 hours ago, bigrednole said:

Well, I sold at $44. I was hoping for a bigger drop this week to buy back in. There are too many unknowns over the coming months that need to be resolved. I don't see any reason for RCL to go up over the next quarter. Having a definitive "We are sailing out of x, y, z starting August 2" would be a start in the right direction. Unfortunately, we don't know that. After that, are they even going to be able to go to other ports? It may be sailings to Key West, CocoCay, and 4 days at sea. Other countries may not be willing to risk opening to 5,000 cruisers for 5 days out of every week. I am booked in November. For my family, I hope this is behind us and we can go. It will be more than 2 years between a good family vacation and they deserve it. 

 

I did notice that my purchase of the photo package mysteriously did not go through on RCL. All onboard "extras" have gone up significantly. If they were being booked completely out I could understand. 

 

I would not be surprised if Key West is not too anxious to host cruise ships right away.  

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Blizzard54

Blizzard54

Posted
Posted
1 hour ago, bigeck said:

Look at it from a Scotsmans point of view. 25% extra is a nice little earner. I should start booking and get a free cruise with the extra

Yes, I have been working out how to take advantage of some options they are offering.  I found some very nice pricing on some JS's and booked then did a lift and switch. 

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Blizzard54

Blizzard54

Posted
Posted
1 minute ago, Milwaukee Eight said:

I thought the cruises that one can use the 125% are more expensive. S&L offer price protection. 

They can be used on anything.  Not all are more expensive.  If you plan it right you can book an older ship and switch it to a newer ship that has higher pricing. 

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bigeck

bigeck

Posted
Posted (edited)
19 minutes ago, Blizzard54 said:

Yes, I have been working out how to take advantage of some options they are offering.  I found some very nice pricing on some JS's and booked then did a lift and switch. 

Nice if you can use it to upgrade and get double points. I was told in uk, if the fcc os more than the cruise, you will receive the difference in another fcc

 

 

Edited by bigeck
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Ourusualbeach

Ourusualbeach

Posted
Posted
43 minutes ago, Milwaukee Eight said:

I thought the cruises that one can use the 125% are more expensive. S&L offer price protection. 

I just had my Alaska 2020 cruise cancelled.  Took the 125% fcc

 

Rebooked  next year for just about the same price I paid for 2020 (I caught a really good resident rate in Feb)  I end up with an extra $2000 in OBC.  Made a lot more sense than the S&L

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Blizzard54

Blizzard54

Posted
Posted
20 hours ago, bigeck said:

Nice if you can use it to upgrade and get double points. I was told in uk, if the fcc os more than the cruise, you will receive the difference in another fcc

 

 

That is true but watch your timing.  The new FCC is not issued until 30 days after the cruise it is used on so you may have a limited time frame to use it.

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