Corona virus causing NCL cash flow problems? ie: No more refunds. Everything is now a Future Cruise Credit (FCC)

[fstuff1]

16 minutes ago, cementhands said:

Watching the stock for the bottom and purchase more and RCL too!

Not Carnival.stock....

 

i'm dollar cost averaging ncl.

bought at $35, $28. next is $22. buying on 20% drops.

 

wow.. shocked at the growing list of Carnivale owned ships that are being refused to let dock.

newest one:  a ship in Miami is being refused to dock because a couple of their crew were on a ship that's not allowed to dock in California because confirmed corona virus there.

 

i figured MSC would be leading the headlines because they are based out of Italy.

 

Edited March 8, 2020 by fstuff1

[molole]

1 hour ago, Always Cruising said:

Yes, according to the NCL CAS agent I spoke with at length yesterday.  She was surprised, as was I.  Hoping it changes.  I cancelled two that were before final payment (120 days), and she was told by a supervisor that I would receive my c card deposit and CruiseNext payment ($2000 for each of the 2 cruises) as FCC's.  I'm not happy with that decision. 

Thanks for the info.

 

So it's already in effect?  It is not March 10th yet.  Yikes!  

[poffles]

Something I wonder is if FCC gets tied or held to the agent that you booked with.  I would like the FCC to be fully mine to control so that I could even call NCL directly to use it if I wanted ... esp if I don't get refunded any TA admin fee that I paid for the cancelled cruise only to get dinged again in future booking.

[Regguy]

13 hours ago, seekatz said:

Have you researched the cruise lines financial statement to make such a claim regarding "cash flow problems" ?

 

Here is what we do know.  NCLH revised EPS by 75 cents just due to redeployment of the Asia cruises across the three brands (40 sailings total, 21 on NCL).  So, that’s a forecasted earnings reduction of about $170m not taking into account any other COVID impacts.  That’s earnings not even revenue.  That is about 20 percent of forecasted 2020 earnings.

 

Cruise ticket revenue comprises about $4b of the company’s total gross revenue of about $6b.

 

So, yeah, we can’t know exactly how far off new ticket revenue is off but it doesn’t take much to crush cash.  Even 10 percent is going to lead to some very austere expense side measures and we are probably well beyond 10 percent.

 

Wall Street seemed to be guessing around another $330m in projected 2020 dropped earnings as of last Friday and we won’t know until we know, at the next earnings report in May.  If just the Asia redeployment was a $170m event, as I said above it doesn’t take a weatherman to know which way the wind blows.  $4.1b in ticket revenue means over $10m per day in cash is what they are used to.  (You have to back out commissions they are not having to pay but it is still a number north of $10m).  
 

The company anticipates expenses a bit above 80 percent of revenues.  I am not an accountant but that doesn’t price in the cost of short term borrowing if necessary.  It has already baked in a $169m loss.  Cash is very very unlikely to be strong at the moment.

 

(This is not investment advice.  It is back of the envelope message boarding to speculate why NCLH would probably love to be able to suspend cash refunds even for a day.)

Edited March 8, 2020 by Regguy

[molole]

How about pre paid shore excursions, internet, etc?  I already paid over $1000 for NCL excursions, internet etc.  Will they all be part of my "FCC" now?  

 

If true that's a really d!ck move on NCL's part.  Tell me it ain't so!  😭

[poffles]

5 minutes ago, molole said:

How about pre paid shore excursions, internet, etc?  I already paid over $1000 for NCL excursions, internet etc.  Will they all be part of my "FCC" now?  

 

If true that's a really d!ck move on NCL's part.  Tell me it ain't so!  😭

 

Could you not first cancel the excursions and other things that you added after booking, let that go back to credit card, THEN do the trip cancel a bit after?  They certainly can't be doing FCC for excursion cancels on bookings in general.

Edited March 8, 2020 by poffles

[graphicguy]

Not sure if there’s any sort of cash flow issue.  I would imagine that their credit line is pretty healthy.  So, whatever possible temporary cash drawdown is covered by that line.

 

I’m guessing it’s an issue with Royal, MSC and most certainly Carnival with their ships (Princess and Carnival) being in the crosshairs of the Coronavirus issue.

[molole]

1 minute ago, poffles said:

 

Could you not first cancel the excursions and other things that you added lafter booking, let that go back to credit card, THEN do the trip cancel a bit after?  They certainly can't be doing FCC for excursion cancels on bookings in general.

I hope you are right.  My cruise is in September and I do still want to go if possible.  I was going to wait till May to decide but now it seems like I am forced to make the decision by tomorrow, assuming they haven't changed the policy already.  Either way I am not too happy.  🥴

 

 

 

[poffles]

3 minutes ago, molole said:

I hope you are right.  My cruise is in September and I do still want to go if possible.  I was going to wait till May to decide but now it seems like I am forced to make the decision by tomorrow, assuming they haven't changed the policy already.  Either way I am not too happy.  🥴

 

 

 

No you have up until 48 hours before you sail ... so you do not have to decide by tomorrow.  It says for cruises up to September but you can do this cancellation up to 48 hours before.  See their wording below.... (of course they could again change the policy but don't see them changing that quickly).

 

 Beginning March 10, 2020, guests who book a voyage through September 30, 2020 may cancel up to 48 hours from embarkation and receive a 100% future cruise credit to be used for sailings that embark through December 31, 2022. This offer also applies to individual and group guests who are currently booked through this timeframe.

Edited March 8, 2020 by poffles

[molole]

4 minutes ago, poffles said:

No you have up until 48 hours before you sail ... so you do not have to decide by tomorrow.  It says for cruises up to September but you can do this cancellation up to 48 hours before.  See their wording below.... (of course they could again change the policy but don't see them changing that quickly).

 

 Beginning March 10, 2020, guests who book a voyage through September 30, 2020 may cancel up to 48 hours from embarkation and receive a 100% future cruise credit to be used for sailings that embark through December 31, 2022. This offer also applies to individual and group guests who are currently booked through this timeframe.

 

We don't know for sure yet but there is a possibility that if I cancel after March 10 and before my final payment date, my refund will be in the form of FCC instead of real refund to my credit card.  I don't think that's right at all.   

 

After final payment date, FCC is fair enough.  

 

 

[poffles]

Just now, molole said:

 

We don't know for sure yet but there is a possibility that if I cancel after March 10 and before my final payment date, my refund will be in the form of FCC instead of real refund to my credit card.  I don't think that's right at all.   

 

After final payment date, FCC is fair enough.  

 

 

OH ... gotcha!

[forgotmyCCname]

I just called and cancelled my upgraded beverage package on a summer cruise so that I got it as a credit on my Amex; received the confirmation within a minute. 

 

Also; the FAQs state ( today, anyway)that if the future cruise you book costs LESS than your FCC received for Covid cancellation that an additional FCC will be given. At least it isn't "one booking and out". In theory you could cancel a Haven suite , book a balcony and have enough FCC left over for a second cruise.

 

I forsee a big downturn in people pre-booking excursions, wifi, gratuites, etc. I know we wont be adding anything to our existing reservations until this all simmers down.

 

Have a great day, all. 

[Trimone]

Look at the bigger picture, if no ones allowed to work due to this Corona virus, how are people going to have disposable income, I wouldn’t book a weekend away at present, I would mention if you paid for the cruise with your credit card and NCL cancelled, why would anyone take a cruise credit? My holiday dates are booked I should be able to holiday with what company I choose...

[forgotmyCCname]

RE: 

 

We don't know for sure yet but there is a possibility that if I cancel after March 10 and before my final payment date, my refund will be in the form of FCC instead of real refund to my credit card.  I don't think that's right at all.   

 

After final payment date, FCC is fair enough

 

 

It will be FCC for now. Its all on the website. And when I just spoke to NCL the rep confirmed that no credit card refunds will be given after tomorrow at midnight for any cruise fare or added items with the exception of pre-purchased OBC and insurance

 

The FAQs do state it is a temporary policy- who knows what that means in NCL land.

 

I personally do not appreciate the fact that I no longer have the option of a refund on my down payment towards cruise fare if I cancel within the previous deadlines, but we all accept their "rules" when we make that deposit . 

Edited March 8, 2020 by forgotmyCCname

[JustAPilot]

Investors are about to take another bath with cruise ship stocks. This credit is all about keeping cash flow going and stop the bleeding. 
 

https://bc.ctvnews.ca/b-c-s-health-minister-urges-people-to-avoid-cruise-ships-as-start-of-vancouver-season-nears-1.4843586

[Regguy]

1 hour ago, graphicguy said:

Not sure if there’s any sort of cash flow issue.  I would imagine that their credit line is pretty healthy.  So, whatever possible temporary cash drawdown is covered by that line.

 

I’m guessing it’s an issue with Royal, MSC and most certainly Carnival with their ships (Princess and Carnival) being in the crosshairs of the Coronavirus issue.

I just read that medium term United Airlines bonds were trading late last week around 6.3 percent yields.  That’s with long term treasuries at 1 percent.  Money is cheap right now but I cannot see banks too eager to lend to cruise lines at the moment short of some prospect of government intervention.

 

I think that NCL has decided to borrow from its customers.  We should know fairly quickly whether or not it is working.

[Regguy]

Just a little more to those who may be interested, it looks as though the last significant trade of NCL bonds last Friday was sold at $86.  They are 2024 maturity bonds with 3.625 percent coupons.  So, yeah, a $14 premium on a 3.8 year to maturity bond with a coupon already over 3.5 percent.

 

NCL is going to have difficulty borrowing cash if lenders can simply buy their debt at high rates instead.  

[luv2kroooz]

4 hours ago, BirdTravels said:

All money given to most cruise lines turns into a non-refundable deposit. Use it on a more expensive cruise in the future or lose it. 

And the requirement to use your FCC on a more expensive cruise or lose it is incorrect, as it relates to NCL. The actual policy is clearly outlined in the FAQ section of NCLs website and is summarized below.....

 

If the cruise fare for the new booking exceeds the FCC’s value, guests will be responsible for the difference. Alternatively, if the new cruise fare is lower than the FCC’s value, a new FCC will be issued for the remaining balance.

[Buford T Justiice]

Cash flow is always a concern when evaluating capital intensive businesses. Here's NCLH's Cash Flow for prior periods :

 

Free Cash Flow

2019 - 185,435,000            

2018 508,375,000

2017 213,527,000

 

Edited March 8, 2020 by Buford T Justiice

[hamrag]

6 hours ago, FredT said:

The first day of my first semester in gradueat school (MBA) our professor in Finance said "When coming into a new company DONT look at the Balance sheet, DONT look at the Income statement, DONT look at any of the financial ratios....  LOOK AT THE CASH FLOWS.....  Current cash flows and ONLY current cash flows determine weather your company will sink or swim."

 

That was excellent advice.

[luv2kroooz]

5 hours ago, molole said:

How about pre paid shore excursions, internet, etc?  I already paid over $1000 for NCL excursions, internet etc.  Will they all be part of my "FCC" now?  

 

If true that's a really d!ck move on NCL's part.  Tell me it ain't so!  😭

 

It looks to be true, unfortunately. And I've been researching how it compares to others in the industry. My research shows it compares unfavorably. Royal Caribbean, Carnival, Celebrity, and Princess are providing cash refunds for prepaid items, port charges, and refundable parts of the cruise fare. I'll continue researching, but, except for Norwegian, I haven't been able to find anyone that is turning port charges, prepaid items, and refundable parts of the cruise fare into nonrefundable future cruise credits.

 

Royal Caribbean entities give you more time to redeem the future cruise credits but less time to actually sail. 

 

Carnival and Princess are also offering generous onboard credits for booked guests that choose to cruise on their original booking.

 

Disney is allowing full FCCs up to 24 hours prior to sail date, but making you redeem and sail within one year. Pretty restrictive, in my opinion.

[julig22]

5 hours ago, poffles said:

 

Could you not first cancel the excursions and other things that you added after booking, let that go back to credit card, THEN do the trip cancel a bit after?  They certainly can't be doing FCC for excursion cancels on bookings in general.

From the "Peace of Mind" letter that was sent to TA's: 

"FCC will include all components of the reservation that have been paid, including but not limited to: shore excursions, beverage and dining packages (including associated gratuities), service charges and air or transfers pre purchased through Norwegian."

 

So if you prepaid and want a cash refund, do it before March 10.  Whether they will let you is another story.

[julig22]

27 minutes ago, blcruising said:

 

It looks to be true, unfortunately. And I've been researching how it compares to others in the industry. My research shows it compares unfavorably. Royal Caribbean, Carnival, Celebrity, and Princess are providing cash refunds for prepaid items, port charges, and refundable parts of the cruise fare. I'll continue researching, but, except for Norwegian, I haven't been able to find anyone that is turning port charges, prepaid items, and refundable parts of the cruise fare into nonrefundable future cruise credits.

 

Royal Caribbean entities give you more time to redeem the future cruise credits but less time to actually sail. 

 

Carnival and Princess are also offering generous onboard credits for booked guests that choose to cruise on their original booking.

 

Disney is allowing full FCCs up to 24 hours prior to sail date, but making you redeem and sail within one year. Pretty restrictive, in my opinion.

I question whether or not they are actually able to hold onto port charges and taxes, since that is money essentially held in trust and is due to the ports, not NCL. I have to assume that the legal department is all over this but maybe NCL will see the error of their ways and make refunds.

[sammee]

I leave March 15 on Bliss. I hope this cruise goes off.  I prepaid drink package SC, reg. gratuities, excursion, internet OB, $280 admin fees (casino comp) and also $300 OBC . This is my first time on NCL, it's usually RC or Carnival for me. With this move, it will probably be my last. Just hoping I don't have to face this situation.

[kessdarln]

I would be disappointed if my cruise is cancelled.  The fee, the perks, tax, tip, internet, and so on, I feel I am getting an amazing deal (for 1) and doubt this opportunity will come again for a similar cruise later in the year.