SS Future Re-Open Plan: Timing, Testing Needs??!!

[crusinbanjo]

13 minutes ago, chrism23 said:

I do not know all the fine points of bankruptcy law which leads to the following questions.  In conventional corporate bankruptcies there are usually assets that are used as collateral.  Example, a real estate developer owns a mall and declares bankruptcy.  The mall, the asset, is then sold at auction and the proceeds applied to the debt.  This is even the same with small home owners who declare personal bankruptcy, the home is sold and the proceeds revert to the debt holder(s).  With a cruise line, their principal assets are there ships.  The cruise line would not have reached bankruptcy if they had liquid assets to meet their financial obligations.  However, and this is where I have trouble understanding, in an industry wide shake out, multiple bankruptcies filled in nearly the same time period by the big cruise lines-RCCI, Carnival, etc. their prime assets, their ships are essentially  worthless, and incurring sizable constant costs by being maintained in dry dock or wherever.  In short, why would any entity buy assets that are rapidly depreciating with extremely high carrying expense.  Now as you point out above, I perhaps could see the big lines selling off boutique smaller lines-Silversea, Seabourne, Regent etc, that have lesser ongoing expenses, in hopes that a corporate entity with deep pockets, might speculate that these smaller niche lines may soon be profitable before the carrying costs become to onerous. And raise capital this way.   But for any corporate entity to step in and buy one of the behemoths-RCCi for example, is beyond my pay grade.  I just don't understand why and how this could happen.  A lot of ifs here but I am essentially clues.  Thanks for any enlightenment.   

 

In a US bankruptcies the company could be either liquidated, (Chapter 7) or re-organized, (Chapter 11), and move forward as a new on going concern, like GM, (I know they got a  they got a Government bailout, but the process is similar even without a bailout).  

That being said, I don't know how international companies that are registered corporations of other foreign countries file for bankruptcy and what laws would apply.  I assume RCCL would need to file in Bermuda and their laws would apply and others would need to file in the country where they are incorporated.  Hopefully this will end in 2021 and we never will have to find out!

[jpalbny]

@chrism23 I am no expert either but here is how I think about it.

 

The big lines would go out of business due to unservicable debt that they can't repay or refinamce, once they run out of cash to burn. Bankruptcy discharges that debt so someone else can buy the assets for a fraction of their value. Those assets are not worthless.

 

Even if the assets continue to generate negative cash flow for the new owner, that negative cash flow isn't on top of a ton of debt. So acquiring those assets out of bankruptcy resets the clock, and might let the new owners ride out the rest of the pandemic until cruising starts again.

 

Example, if RCCL goes bankrupt in March 2021. Manfredi could buy the ships back for 100-200M (He sold SS for billions. He should have cash). Now he owns the ships with no debt and can burn cash for another 6 months, and survive until cruises starts in September 2021. I know my numbers aren't accurate but I think the point holds. Would love to hear what others, who know more than I, think about this.

Edited December 7, 2020 by jpalbny

[TLCOhio]

18 minutes ago, crusinbanjo said:

In a US bankruptcies the company could be either liquidated, (Chapter 7) or re-organized, (Chapter 11), and move forward as a new on going concern, like GM, (I know they got a  they got a Government bailout, but the process is similar even without a bailout).  That being said, I don't know how international companies that are registered corporations of other foreign countries file for bankruptcy and what laws would apply. 

 

Excellent follow-ups and comments from Mr. Banjo and J.P.  Yes, I was going to mention about Chapter 7 versus Chapter 11.  BUT, sorry, I had forgotten about that little "details" involving these companies being corporations in foreign countries and/or islands.  Very complicated and confusing!!??

 

Then, I realized that when large international corporations borrow hundreds of millions of dollars, the smart lawyers, hedge funds and banks place very specific provisions in these contracts as to which creditors would have the highest priority (or not) against the various assets, if a worse-case situation happens.  What is complicated gets even more super technical and highly involved legally.

 

My guess is that if you are an average traveler who made a large deposit or advanced payment with a cruise line, you are going to be at . . . "THE END OF A LONG, LONG LINE".  We would be the very small fish in a giant sea of sharks!!   Right or wrong?  What else are we missing?

 

The good news, so far, is that the major cruise lines have been able to issue new stock, borrow added cash, sell some future cruises, etc.  I can see "light at the end of the tunnel".  However, I am glad that we do not now have any deposits or payments in their hands.  

 

THANKS!  Enjoy!  Terry in Ohio

 

Sydney to NZ/Auckland Adventure, live/blog 2014 sampling/details with many exciting visuals and key highlights.  On page 23, post #571, see a complete index for all of the pictures, postings.  Now at 231,463 views.

www.boards.cruisecritic.com/showthread.php?t=1974139

[SSCAF001]

Is an Atol protected down payment 100% safe in case SS goes bankrupted? Thanks. 

[docruth]

1 hour ago, chrism23 said:

I do not know all the fine points of bankruptcy law which leads to the following questions ...

 

Hi @chrism23,

 

What you are describing are the legal issues around the actual process of bankruptcy, the waterfall of debt priority, and to us mere mortals, the way it all works is incredibly obtuse. There are multiple forms of bankruptcy, and Chapter 7 and Chapter 11 are the most well known, as the previous poster suggested. However, liquidation or reorganization, while seemingly the way this could go, are by no means the only options available to management working to bring a publicly traded company through the pandemic. 

 

Here’s a thought on your main point though, I’m not too sure we need to worry about the majors disappearing. Even though it doesn’t seem obvious, the assets of the cruise lines may not primarily be the ships. As we know that basic corporate finance management principles dictate that it’s almost always advantageous to lease, rather than buy, taxable capital assets. Therefore, it’s very likely that the ships are mortgaged to the hilt, but the personnel, port slots, private islands,  other real estate, operations trade secrets, customer contact info, vendor relationships, and other ‘cruise business’ property, that might actually be where the real value of these companies is located. Important when you try to think about what this business looks like, post-pandemic.

 

Beyond going to the market for a new debt or equity offering, merging with another company, selling off assets, or moving to a different business model, I’m really not sure how the cruise lines survive into 2022 without a restart pretty soon. What I am sure about, is that once the companies figure out a strategy for their businesses going forward, we’ll see a very different offering for cruise vacations from that we’ve seen in the past.

 

In fact, if what I saw about NCL equipping their fleet with the Atmos (sp?) ionizer air filtration system is true, maybe changes will make cruise ships environmental safe havens for vacations of the future.

 

Cheers,

 

Doc Ruth

 

 

 

According to my DH, that’s the  

[worldtraveller99]

What about those of us who have paid £7,000 already to SS for our cruise - aiming to move to 2022 right now? They have asked for a bit more money now, as the price has gone up. What do you think? 

 

PS They say they may have the Alaska cruise running in 2021, but that does not mean that we in the UK will be able to travel to Canada to join it.

[docruth]

54 minutes ago, worldtraveller99 said:

What about those of us who have paid £7,000 already to SS for our cruise - aiming to move to 2022 right now? They have asked for a bit more money now, as the price has gone up. What do you think?  ...

 

World Traveller,

 

And that’s the heart of the matter, at least for this thread ... thanks so much for your post!

 

So here we have another poster who’s in the same position as so many of the rest of us. Terry’s done a great job of keeping us on track, posting new info, and reminding us of our thread’s purpose. Lots of other folks have posted info directly from their interactions with SS sources, cited travel journal articles, and described their individual circumstances. We’ve exchanged really good info, however the situation is such that it’s likely to remain fluid for a while, and so we’ll have to continue to adapt.

 

Looking forward, what does the combined brainpower of the thread say? Move to 2022? Stick with present plans to see if SS cancels? Plan for a contingency, or maybe even another type of vacation?

 

After cancelling half a dozen cruise vacations, some up to a month’s duration away from home, I’m getting travel re-planning fatigue. So if it was me, I’d take my refund, and wait for the situation to stabilize. Of course, then you give up the 25% bonus on the FCC, which could offset a future increase (I believe very likely) in the price. JMHO.

 

Doc Ruth

[worldtraveller99]

Sadly though we could have done this in March 2020 (for 2020) I took the FCC and rebooked for 2021. After all it couldn't continue that long? But now it has and - so far - they will not cancel 2021 and we in the UK may not be able to travel to join the cruise. 
 

So I am yet again postponing - which I can do with SS - to 2022 - so why do they still want more money (not a lot) up front now? Do they think they are going out of business?

[Randyk47]

We are looking in 2022 and have written off 2021.   Must stress looking but not booking.   Sure we are taking the chance the cruise we might want will get booked up but we’re not willing to put money on the table right now.   

[Lois R]

11 minutes ago, Randyk47 said:

We are looking in 2022 and have written off 2021.   Must stress looking but not booking.   Sure we are taking the chance the cruise we might want will get booked up but we’re not willing to put money on the table right now.   

Hi Randy, I am still hoping to cruise next year......not sure it will happen but I have a deposit

down for Oct 2021..........maybe I will still be able to step on board the ship.

[Randyk47]

30 minutes ago, Lois R said:

Hi Randy, I am still hoping to cruise next year......not sure it will happen but I have a deposit

down for Oct 2021..........maybe I will still be able to step on board the ship.

 Carey doesn’t graduate from the Army War College until late July 2021 so earlier was already out of the picture.   Figuring the distribution of vaccines we also think it will be 2022 before we feel comfortable traveling.  The cruise we’re interested in is a Northern Europe Baltic cruise with time in St Petersburg.   Really need to see where world and cruising is before we travel to Europe.

Edited December 7, 2020 by Randyk47

[docruth]

50 minutes ago, Randyk47 said:

... Figuring the distribution of vaccines we also think it will be 2022 before we feel comfortable traveling ...

 

Randy,

 

Yup, we agree, 2022 at the earliest. Unfortunately I’ve still got two cruises standing for 2021, both rapidly coming up to final pmt with a small NRD. Neither will likely go, but X and AZ have not cancelled yet. Process was much easier with SS, as they wiped what we had off the books way earlier on in the pandemic, then the refund went directly back to the credit card.

 

These two trips, actually three because one’s a B2B, cancel, and this will be the first time in twenty years that we don’t have a single cruise vacation, or really any international travel at all, on our calendar. Surreal!

 

Next six months should tell us a lot about the future of cruising, let’s hope it’s better news!

 

Cheers,

 

Doc Ruth

[Stumblefoot]

11 hours ago, jpalbny said:

He sold SS for billions. He should have cash.

Cash is gone as most of his money is tied up in other vehicles.  If he had $100M - $200M lying around, he would have never sold for the remaining one-third of SS for 5.2M shares of RCL common equity this past July. 

 

It's pretty clear he couldn't meet his financial obligations of Silversea as required by the agreement with Royal.  Once late March had rolled around and Manfredi knew the financial impact was going to be absolutely crushing, negotiations got serious in a hurry and ultimately led to terms of agreement in June.  As a result, RCL swooped in to pick up the remaining one-third of Silversea they didn't own as the value of Silversea had plummeted -63.3% from its $2B valuation in 2018 to $735M in July 2020. 

 

With all that said, I estimate Manfredi's shares in RCL have appreciated by a minimum of roughly $150M since July.  I have no idea what his lock up period is or whether they are related to his continued role as Chairman of Silversea.

[kimanjo]

From the Joint Committee of Vaccination and Immunisation (JCVI)  Brittish.  I expect the US ranking to look pretty similar.

 

 

The priority groups are ranked as follows:

• 1: residents in a care home for older adults; staff working in care homes for older adults
• 2: all those 80 years of age and over; frontline health and social care workers
• 3: all those 75 years of age and over
• 4: all those 70 years of age and over, CEV individuals (not including pregnant women and those under 16 years of age)
• 5: all those 65 years of age and over
• 6: adults aged 16-65 years who are in an at-risk group
• 7: all those 60 years of age and over
• 8: all those 55 years of age and over
• 9: all those 50 years of age and over

Potential passengers?  This is what I've been saying the struggle is going to be.  "young" people, families, children, where are they on this list?  Way down the bottom. For the big 3, it's the last people on the list  who they need to get back in large numbers to get some sort of cash flow going.

 

Sure, there are some wallet able, body willing, 65+ pax, but a tiny percent of the overall population.   I think it's not the 400 pax ships. It's the 4,000 mega ships that need to be filled to keep them "afloat".

 

  I used the NYTimes "where do I stand in line" calculator.

 

https://www.nytimes.com/interactive/2020/12/03/opinion/covid-19-vaccine-timeline.html

 

 In my county, I am behind 837,000 others.  It's going to take a LONG time to get to the healthy 40's and 50's and 60's ( plus kids), to feel comfortable.   And that comfort level is probably being vaccinated. 

 

And what cruiseline will want only a small portion of their guests to be vaccinated, and the others not? Can that even work??? Just from a liability angle, they cannot have outbreaks.  We know by the SeaDream debacle, testing alone wont work.

 

 

[brimary]

For safe cruising to recommence it will be on the basis of everyone on board a ship having proof of vaccine which throughout the World seems a million miles away at present.Hence personal choice sadly is to keep money in my pocket rather than hand it over to the unknown!

[kimanjo]

30 minutes ago, brimary said:

For safe cruising to recommence it will be on the basis of everyone on board a ship having proof of vaccine which throughout the World seems a million miles away at present.Hence personal choice sadly is to keep money in my pocket rather than hand it over to the unknown!

 

I absolutely agree!

[QueSeraSera]

9 hours ago, kimanjo said:

I used the NYTimes "where do I stand in line" calculator.

 

https://www.nytimes.com/interactive/2020/12/03/opinion/covid-19-vaccine-timeline.html

 

 In my county, I am behind 837,000 others

Thanks for the link, very interesting,

[Stumblefoot]

10 hours ago, kimanjo said:

In my county, I am behind 837,000 others.

I'm in great shape.  Only 268.7 million people are ahead of me.  

[kimanjo]

38 minutes ago, Stumblefoot said:

I'm in great shape.  Only 268.7 million people are ahead of me.  

 

38 minutes ago, Stumblefoot said:

I'm in great shape.  Only 268.7 million people are ahead of me.  

 

Where were you in your county? Not the country.

[Stumblefoot]

1 hour ago, kimanjo said:

Where were you in your county? Not the country.

407.1K

[worldtraveller99]

I did it for Essex County NJ where I once lived and I think there are 286 million people in the USA ahead of me too! So maybe it's a good thing I have now moved our Alaska cruise to July 2022. Hopefully my husband and I will have been vaccinated - in England - by then!

 

Fun website kimanjo!

[chrism23]

On 12/7/2020 at 4:12 PM, worldtraveller99 said:

PS They say they may have the Alaska cruise running in 2021, but that does not mean that we in the UK will be able to travel to Canada to join it.

 

I so agree with Dr. Ruth below about planning and replanning fatigue.  With my request last week to cancel a 6/21 Greek Isle trip I no longer have any money in the game, and know not to worry or fret as to when that refund comes through.  So that much is done and dusted.  Regarding your post above WT,  on the viability of an Alaskan cruise in 2021.  IMHO, absolutely no way.  The projections that have come out on vaccination timetables in the US has it completed early to late summer of 21.  But here is the kicker.  That vaccination timetable only reflects US residents, and I assume Western European residents will be ahead of us, but it says nothing about crews and personnel.  A ship cannot sail unless the crew is also vaccinated. The ships aren't set up to handle even a small outbreak among a crew, let alone serious cases requiring an ICU type capacity.  So, as Stumblefoot and Kimanjo pointed out above, I am 1,000,060 in line just here in the small state of CT.  And I am 65+ with a bunch of underlying conditions.  There are a lot of people ahead of all of us.  But, if service employees, world wide were included in the number needed to sail that number would be more in the billion person range.  And yes over the coming months more vaccines may be approved that may greatly speed up this process.  But service employees will  no doubt remain down at the bottom of a billion+ person list.  So, once again I am the bearer of bad tidings.  Damn. I am thinking the spring of 2022 as an optimistic target when the industry might get go back to some semblance of functionality.  

[chrism23]

Well so much for RRCi's cruise to nowhere.  Quarantine and back to port.  Just in from Yahoo (below) and Bloomberg.

 

https://news.yahoo.com/royal-caribbean-cruise-nowhere-ends-144047595.html

 

[silkismom]

I didn't know that diarrhea was part of covid, I would have thought something else, food poisoning?

[tosteve1]

28 minutes ago, silkismom said:

I didn't know that diarrhea was part of covid, I would have thought something else, food poisoning?

Diarrhea has been reported. Everybody gets tested with just about anything now. There are false positive antigen tests though so who knows. They won’t take any chances.