Jump to content
Cruise Critic Community
sverigecruiser

Any signs of bankrupcy for any major cruiselines?

Recommended Posts

 

Has anyone seen any signs that any of the major cruiselines are close to bankrupcy yet?

 

A small Swedish cruisecompany, Birka Cruises, has announced that they are closing down their business because of the Covid-19 effects to the economy.   

Share this post


Link to post
Share on other sites

None of the big ones yet. If they delay cruises into April or later 2021, you could see them looking at it to protect themselves from creditors. 

Share this post


Link to post
Share on other sites

I've heard that NCL is the line most susceptible to "reorganization".  Other lines may survive by selling off or scrapping the oldest ships in their fleets and operating with reduced fixed overhead.

 

In any case, the longer the pandemic lasts, the harder it will be for cruise lines to re-open. And, as cruising is just a slice of the overall tourism dollar, some ports and countries may find themselves limiting access to ships from lines that do survive the effects of this virus.

 

Future cruising may evolve into a form none of us would have imagined pre-pandemic.  Remember that it is a voluntary leisure activity and therefore non-essential to the economic health of a country.  Tourism accounts for about 15% of a Caribbean Island's GDP, and cruising is a smaller % of that figure.

Share this post


Link to post
Share on other sites

Who knows?  RCI and Carnival Corp both have multiple cruise line subsidiaries.   Either one could easily let one of their subs slide into bankruptcy if the financial situation warranted it.  This would clearly not be good for the industry as a whole.

 

We do not know since we only see the consolidated financial statements.  We do not get to see the individual  financials on the subs such as Princess,  HAL, Costa, etc for Carnival Corp or Celebrity, Azamara, etc. for RCI Corp.

Share this post


Link to post
Share on other sites

https://www.fool.com/investing/2020/04/02/if-carnival-stock-is-worth-8-what-about-royal-cari.aspx

 

Carnival didn't just raise $500. It also sold $1.75 billion in convertible notes and raised a better-than-expected $4 billion in secured bonds yielding nearly 12%.

 

With more than $6 billion raised, Carnival has enough liquidity to get through this interruption.

 

It remains to be seen where consumer appetite for cruising will stand when ships start sailing again, but Carnival now has the money it needs to get to that point.

 

It had to suffer a lot of dilution through the discounted stock and convertibles -- and that 12% yield is going to be a bear in this environment -- but hey, it's safe to book a Carnival cruise for next year now

 

 

 

 

Share this post


Link to post
Share on other sites

So far only pullmantur and Birka have closed down operations permanently

Share this post


Link to post
Share on other sites
8 hours ago, sverigecruiser said:

 

Has anyone seen any signs that any of the major cruiselines are close to bankrupcy yet?

 

A small Swedish cruisecompany, Birka Cruises, has announced that they are closing down their business because of the Covid-19 effects to the economy.   

I have no idea but now is not the time to invest in cruise line stocks.

Share this post


Link to post
Share on other sites
1 hour ago, drsel said:

but hey, it's safe to book a Carnival cruise for next year now

 

What on earth? You mean from a financial standpoint. I can't see anyone letting them sail and all those other things that cruise passengers want to do. MAYBE 2022.

Share this post


Link to post
Share on other sites

I believe that the only sign one will get is an announcement from the cruise line.

Share this post


Link to post
Share on other sites
2 hours ago, drsel said:

https://www.fool.com/investing/2020/04/02/if-carnival-stock-is-worth-8-what-about-royal-cari.aspx

 

Carnival didn't just raise $500. It also sold $1.75 billion in convertible notes and raised a better-than-expected $4 billion in secured bonds yielding nearly 12%.

 

With more than $6 billion raised, Carnival has enough liquidity to get through this interruption.

 

It remains to be seen where consumer appetite for cruising will stand when ships start sailing again, but Carnival now has the money it needs to get to that point.

 

It had to suffer a lot of dilution through the discounted stock and convertibles -- and that 12% yield is going to be a bear in this environment -- but hey, it's safe to book a Carnival cruise for next year now

 

 

 

 

 

2 hours ago, drsel said:

https://www.fool.com/investing/2020/04/02/if-carnival-stock-is-worth-8-what-about-royal-cari.aspx

 

Carnival didn't just raise $500. It also sold $1.75 billion in convertible notes and raised a better-than-expected $4 billion in secured bonds yielding nearly 12%.

 

With more than $6 billion raised, Carnival has enough liquidity to get through this interruption.

 

It remains to be seen where consumer appetite for cruising will stand when ships start sailing again, but Carnival now has the money it needs to get to that point.

 

It had to suffer a lot of dilution through the discounted stock and convertibles -- and that 12% yield is going to be a bear in this environment -- but hey, it's safe to book a Carnival cruise for next year now

 

 

 

 

Of course, their ability to get through  “this interruption” will obviously depend upon the length of the “interruption” - which has already been extended several months past the August 1 start up date recently planned.  That $4 billion raised through the 12% bond sale is accruing them $40,000,000 per month in interest costs —- on top of all their other fixed costs.  The upcoming Caribbean cruising season will be vital to them - and right now Florida and Texas - from whose ports those itineraries will sail - are in pretty poor shape when it comes to coping with COVID.  

 

What dates next year would you feel are “safe” to book now?

Share this post


Link to post
Share on other sites

Its not safe to book any Cruise around The USA or South America.

Cruises around the middle East and Asia after mid October 2020 and Australia in 2021 should be ok.

 

 

 

Share this post


Link to post
Share on other sites
38 minutes ago, drsel said:

Its not safe to book any Cruise around The USA or South America.

Cruises around the middle East and Asia after mid October 2020 and Australia in 2021 should be ok.

 

 

 

 

I disagree with your assertion considering that cruise passengers come from all over the world.

Share this post


Link to post
Share on other sites
6 hours ago, iancal said:

Who knows?  RCI and Carnival Corp both have multiple cruise line subsidiaries.   Either one could easily let one of their subs slide into bankruptcy if the financial situation warranted it.  This would clearly not be good for the industry as a whole.

 

We do not know since we only see the consolidated financial statements.  We do not get to see the individual  financials on the subs such as Princess,  HAL, Costa, etc for Carnival Corp or Celebrity, Azamara, etc. for RCI Corp.

No lender these days will lend money out to a sub without a guarantee from its parent or major shareholder. 

Share this post


Link to post
Share on other sites
6 hours ago, iancal said:

Who knows?  RCI and Carnival Corp both have multiple cruise line subsidiaries.   Either one could easily let one of their subs slide into bankruptcy if the financial situation warranted it.  This would clearly not be good for the industry as a whole.

 

We do not know since we only see the consolidated financial statements.  We do not get to see the individual  financials on the subs such as Princess,  HAL, Costa, etc for Carnival Corp or Celebrity, Azamara, etc. for RCI Corp.

It would be very difficult for Carnival Corp. to “downstream” their debt obligations to one of two subsidiaries.  That sort of scam would be hard to achieve — their new creditors lent Carnival Corp. the money - and will look to Carnival Corp. for repayment.

Share this post


Link to post
Share on other sites
Posted (edited)

Agreed .  The number one question of any of those subsidiaries considering bankruptcy would probably be ‘is there enough liquidation value to satisfy those senior debt or credit holders ‘ without requiring monies guaranteed by the parent.   In which case the unsecured creditors would take the big hit.  I suspect that there is no

Edited by iancal

Share this post


Link to post
Share on other sites
5 hours ago, lenquixote66 said:

I have no idea but now is not the time to invest in cruise line stocks.

 

I did in 2008-2009 and was rewarded.  Tempted to do so earlier in the year.  Didn't and am glad that I didn't.  The question that I have that no one can answer is:  Ought my positions be liquidated now?  

Share this post


Link to post
Share on other sites

The time to buy Carnival was a few weeks ago at 8 1/2 or so.  The time to sell was a little later was when it hit the $15-17 range.   I feel the opportunity has gone.

Share this post


Link to post
Share on other sites
17 minutes ago, rkacruiser said:

 

I did in 2008-2009 and was rewarded.  Tempted to do so earlier in the year.  Didn't and am glad that I didn't.  The question that I have that no one can answer is:  Ought my positions be liquidated now?  

The only time I bought stock was 1968 ,Madison Square Garden.That did not work out too good.

Share this post


Link to post
Share on other sites

I cruise line that I took in 2001 and loved before 9/11 renaissance went bankrupt shortly after 9/11 so its definitely possible. 

Share this post


Link to post
Share on other sites

It all depends on how long this goes on. Right now, they will weather the storm for a few months. They can raise money.

 

If this kind of stuff never ends, cruising as we know it, may be in trouble.

Share this post


Link to post
Share on other sites
1 hour ago, iancal said:

The time to buy Carnival was a few weeks ago at 8 1/2 or so.  The time to sell was a little later was when it hit the $15-17 range.   I feel the opportunity has gone.

The opportunity may still come and go several times in the next few months - it is extremely volatile.  If you bought on May 14 when it hit $12.27 and sold on June 8 when it hit $24.91, you would have doubled your money.  Of course the guy who bought it from you on June 8 at $24.91 would have been looking at a paper loss of over 40% when it hit $15.88 on July 2.

 

Do you feel lucky ... well, do you?

Share this post


Link to post
Share on other sites
23 minutes ago, Joebucks said:

.... Right now, they will weather the storm for a few months. They can raise money.

 

...

They have already raised money - $ billions,  at interest rates many multiples of current corporate financing norms.  How often can they go to the well?

Share this post


Link to post
Share on other sites

You might also work the reverse and short it!

 

Share this post


Link to post
Share on other sites

The more time it takes for America to get a grip on this pandemic, the harder it will be for leisure cruise lines to exist in limbo.  We have done a terrible job of managing a health response, and the virus seems to be winning.

 

We are still in the 1st wave of transmission, and if a 2nd wave in the autumn or winter gets mishandled as well, then we can kiss cruising goodbye.  The cruise lines will not be able to outlast the virus.

 

Perhaps a few ships might still sail in locations where the virus spread has been mitigated, but they will probably not allow Americans to travel there if we can't adopt a reasonable national response to the virus to control and limit its spread.  We sometimes forget we are the world's leader in virus transmission and deaths by a huge margin.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Forum Jump
    • Categories
      • Forum Assistance
      • SPECIAL EVENT: Q&A with the Quark Expeditions Team!
      • New Cruisers
      • Cruise Lines “A – O”
      • Cruise Lines “P – Z”
      • River Cruising
      • ROLL CALLS
      • Digital Photography & Cruise Technology
      • Member Cruise Reviews
      • Special Interest Cruising
      • Cruise Discussion Topics
      • UK Cruising
      • Australia & New Zealand Cruisers
      • North American Homeports
      • Ports of Call
      • Cruise Conversations
×
×
  • Create New...