Any signs of bankrupcy for any major cruiselines?

[ontheweb]

13 hours ago, navybankerteacher said:

I would say that travel and tourism is at most risk -- being activities most easily deferred by customer base.  Airlines also -- as they operate on fairly close margins at best of times - with exception of Southwest virtually all major players have already gone through bankruptcy in recent years.  Without ongoing major support from Govt. they are virtually sure to again.  Banks have largely already set aside loan loss reserves in anticipation of significant defaults on loans , and may be able to weather a good number of months.   

 

One sector you have not mentioned but which is in deep trouble - but which ordinarily cannot seek bankruptcy protection - is local government.  Already close to the bone, their tax revenues are drying up while their day-to-day expenses have been surging.

They cannot print money like the Feds, and their ability to substantially increase tax revenues is limited.  Real estate tax payments are going to be late (at best), local income tax revenues lower due to unemployment, while their service costs will not decline.  I think this area is the real long-term tough one.

I saw on the news this morning that because they accepted bailout money, the airlines are prohibited from laying off employees until October first. But they are warning employees that there will be massive layoffs after that date.

 

I don't know if you were counting them as part of local government or not, but school districts also face the same problems as local governments.

[AF-1]

ontheweb;  you are correct.  United Airlines has already sent a memo out saying at least 16,000 employess will be let go on Oct 1st

[navybankerteacher]

3 minutes ago, ontheweb said:

I saw on the news this morning that because they accepted bailout money, the airlines are prohibited from laying off employees until October first. But they are warning employees that there will be massive layoffs after that date.

 

I don't know if you were counting them as part of local government or not, but school districts also face the same problems as local governments.

Yes - education is virtually always the largest expense carried by local government (towns and cities in most states fund their own school systems - often with substantial contribution from state government - while federal government contributes just a focused small amount).

[ontheweb]

1 minute ago, navybankerteacher said:

Yes - education is virtually always the largest expense carried by local government (towns and cities in most states fund their own school systems - often with substantial contribution from state government - while federal government contributes just a focused small amount).

In NY state, the state does provide funding, but much is raised through local property taxes. (Once upon a time long ago, I served on my district's local school board.) The percentage of state versus local funding varies greatly between districts.

[navybankerteacher]

2 hours ago, ontheweb said:

In NY state, the state does provide funding, but much is raised through local property taxes. (Once upon a time long ago, I served on my district's local school board.) The percentage of state versus local funding varies greatly between districts.

That is largely the way it is in CT - there is no county government (other than courts)  - and each town or city has its own school system.  The state contributes varying amounts - virtually nothing to the wealthier towns and substantially to the cities and poorer towns. I served a couple of terms on school board - and, after I retired, as a substitute teacher (elementary school only -having no inclination to put up with the wise-ass treatment middle and high school kids like to give subs) and as a one-on-one tutor for high school students.

[bigrednole]

I have a feeling that all cruise lines will seek protection if they are not sailing for the XMas and New Year's cruises. I don't see how they can hemorrhage that much money for 9 months and not go under.  

[navybankerteacher]

25 minutes ago, bigrednole said:

I have a feeling that all cruise lines will seek protection if they are not sailing for the XMas and New Year's cruises. I don't see how they can hemorrhage that much money for 9 months and not go under.  

The end of the year may well be the tipping point.  Aside from simply running through their existing war chests, there seems little likelihood of their being able to borrow any more.  Carnival  has already visited the loan sharks for their 12% debentures. Their hard assets must be already mortgaged to the hilt - and present management will want to seek some sort of credible debtor-in-possession status, so they will at some point need to turn off the valve which is currently draining their vault.

[gerryuk]

Cruise and Maritime Voyages (CMV) with 5 ships including the Marco Polo have gone bankrupt, today.

Edited July 20, 2020 by gerryuk
z

[jocap]

2 minutes ago, gerryuk said:

Cruise and Marine Voyages (CMV) with 5 ships including the Marco Polo have gone bankrupt, today.

That was such sad news to hear today... old ships but interesting itineraries. 

[EscapeFromConnecticut]

On 7/19/2020 at 7:23 AM, bigrednole said:

I have a feeling that all cruise lines will seek protection if they are not sailing for the XMas and New Year's cruises. I don't see how they can hemorrhage that much money for 9 months and not go under.  

One of the great Houdini acts of this year: Cruise executives have made millions in compensation disappear, without even a ripple of value or usefulness.

Fain, Donald, Del Rio & their fleets of execs, directors, senior manager, consultants and counsels have all kept slurping at the corporate troughs ... yet they've done nothing of substance to salvage their failing businesses.

 

Donald this week is quoted saying Carnival hasn't established COVID protection protocols because they're not sailing yet ... of course, they're not sailing yet because the CDC gave them a list of problems to address back in March. And they've made no progress. March through July, and they're still doing nothing except taking new deposits for the next round of entirely fictional cruises. 

RCI and NCL suddenly decide to do a joint study of what they'd need to do to address the CDC concerns. They started in June - three months after the music stopped for cruise lines.

Three things the cruise lines boards could do immediately to stop the bleeding of shareholder value:
- FIRE the executive teams. These people have done nothing except continue to siphon off their compensation.
- DROP OUT of the world's worst trade association, CLIA. Every dollar spent with that outfit is a waste.
- HIRE a fresh executive team with integrity and skill ... then immediately direct them to go, hat in hand, to the CDC to make a pitch for a fresh start to rebuilding relations. 
 

 

[navybankerteacher]

4 hours ago, jocap said:

That was such sad news to hear today... old ships but interesting itineraries. 

I never saw anything bad about old ships.  Marco Polo had character, manageable size, and good itineraries.  I can find climbing walls, go karts, bowling alleys and skating rinks elsewhere.  This fascination with “new” is kind of pathetic — Beethoven’s Ninth has been around for a while - and still seems able to stir the soul.  Where will Katy Perry’s and Beyoncé’s works be a hundred years from now?

[EscapeFromConnecticut]

5 minutes ago, navybankerteacher said:

I never saw anything bad about old ships.  Marco Polo had character, manageable size, and good itineraries.  I can find climbing walls, go karts, bowling alleys and skating rinks elsewhere.  This fascination with “new” is kind of pathetic — Beethoven’s Ninth has been around for a while - and still seems able to stir the soul.  Where will Katy Perry’s and Beyoncé’s works be a hundred years from now?

Indeed, my wife and I will miss Grandeur and Majesty (and probably would have missed the Fantasy class if we'd ever sailed on them). The last couple of generations of "Six Flags of the Seas" behemoths leaves us cold.

I imagine a lot of folks who appreciated small and mid-size ships with full promenades will be turned off by the fleets that survive the current fiasco. 

For the cruise lines, losing the old-school customers wouldn't be a big deal in normal years. But 2021 and 2022 aren't going to look like normal years, and the lines will be desperate for every customer they can get. So scrapping the smaller, older ships will be a short-term Band-Aid for them, but will prove costly in the long run.

[navybankerteacher]

6 minutes ago, EscapeFromConnecticut said:

Indeed, my wife and I will miss Grandeur and Majesty (and probably would have missed the Fantasy class if we'd ever sailed on them). The last couple of generations of "Six Flags of the Seas" behemoths leaves us cold.

I imagine a lot of folks who appreciated small and mid-size ships with full promenades will be turned off by the fleets that survive the current fiasco. 

For the cruise lines, losing the old-school customers wouldn't be a big deal in normal years. But 2021 and 2022 aren't going to look like normal years, and the lines will be desperate for every customer they can get. So scrapping the smaller, older ships will be a short-term Band-Aid for them, but will prove costly in the long run.

It might be the smaller, older ships which will be kept on.  When the costs of health controls are figured in - compounded by the possible necessity of reducing passenger loads - fares might just be enough to make it impossible to attract enough of the budget-minded cruisers.  It is possible that cruising might revert to an activity for the relatively well-to-do that it was until about 20 years ago.  

 

It wont be just the problems lines having in attracting passengers - a lot of ports might no longer see ships bringing 5,000 or so budget-minded short term visitors as that much of a value.  

[bigrednole]

4 hours ago, EscapeFromConnecticut said:

Three things the cruise lines boards could do immediately to stop the bleeding of shareholder value:
- FIRE the executive teams. These people have done nothing except continue to siphon off their compensation.
- DROP OUT of the world's worst trade association, CLIA. Every dollar spent with that outfit is a waste.
- HIRE a fresh executive team with integrity and skill ... then immediately direct them to go, hat in hand, to the CDC to make a pitch for a fresh start to rebuilding relations. 

Cruise lines have issues that are beyond their control. They are facing the same issues all executives in the Leisure/Travel industry are. All of those Execs are getting paid as well. Their pay is definitely taking a massive hit, but it is not public information. If they got rid of their Execs now, the stock will fall 50% and the industry will pay a massive price. It is as simple as that.

 

I know nothing about CLIA, so can't comment.

 

There are no Executives that have any knowledge on how to navigate through this issue. I know the CDC has given a VERY specific list of criteria that has to be met before they will lift the travel ban. I can pretty much guarantee you there are teams and committees assigned to each of those requirements to develop actions for each, cost of each option, and which is the most reliable one that the CDC will accept. The problem is that the CDC is not even discussing with the cruise industry. They are too preoccupied with a pandemic that they are failing to even manage. If you think the cruise line Execs are bad, the CDC Execs are in for a far more impending colonoscopy from the government when this is over. They have failed on EVERY front of this pandemic. Most of it their fault and some of it from the government. This could have all been stopped in January and only cost a few $B by having more of a Marshall Law instead of reactionary tail wagging. Ban anyone from entering to country. Entry into the country would only be through military bases with mandatory 30-day quarantine. Ban leaving your homes and make containment areas. I am not saying NY spread it everywhere, but by not locking them down and forcing them to stay in place, it did spread. 

[babs135]

6 hours ago, navybankerteacher said:

 Where will Katy Perry’s and Beyoncé’s works be a hundred years from now?

Who and who?   🤣🤣

[Roger88]

If I am not mistaken, almost every company has announced that it will face major issues in the upcomming future but I didnt hear anyone really going bankrupt. I suppose its a marketing move in a way. I wonder how it has affected their market shares 

[davecttr]

To sum it up, the cruise industry has a problem, they are caught between a rock and a hard place. Provide a cruise that is COVID safe and it won't be enjoyable enough for sufficient customers to allow them make a profit. Provide a cruise that is enjoyable so they make a profit and someone will get COVID which may kill the cruise line.

 

Meanwhile wait and hope for a vaccine.

[EscapeFromConnecticut]

6 hours ago, bigrednole said:

Cruise lines have issues that are beyond their control. They are facing the same issues all executives in the Leisure/Travel industry are. All of those Execs are getting paid as well. Their pay is definitely taking a massive hit, but it is not public information. If they got rid of their Execs now, the stock will fall 50% and the industry will pay a massive price. It is as simple as that.

 

I know nothing about CLIA, so can't comment.

 

There are no Executives that have any knowledge on how to navigate through this issue. I know the CDC has given a VERY specific list of criteria that has to be met before they will lift the travel ban. I can pretty much guarantee you there are teams and committees assigned to each of those requirements to develop actions for each, cost of each option, and which is the most reliable one that the CDC will accept. The problem is that the CDC is not even discussing with the cruise industry. They are too preoccupied with a pandemic that they are failing to even manage. If you think the cruise line Execs are bad, the CDC Execs are in for a far more impending colonoscopy from the government when this is over. They have failed on EVERY front of this pandemic. Most of it their fault and some of it from the government. This could have all been stopped in January and only cost a few $B by having more of a Marshall Law instead of reactionary tail wagging. Ban anyone from entering to country. Entry into the country would only be through military bases with mandatory 30-day quarantine. Ban leaving your homes and make containment areas. I am not saying NY spread it everywhere, but by not locking them down and forcing them to stay in place, it did spread. 

The problem is, the current crop of listless and clueless executives is NOT facing the issues. It's just slurping off money while watching the business sink.

 

Executives are paid to deal with crises. In this case, that means hiring experts to work with engineers, risk management specialists and attorneys to devise solutions ... or at least propose potential solutions.

 

Instead, Fain, Del Rio, Donald & their underlings keep soaking up the compensation while accomplishing nothing. More debt, more downsizing, more "blame the CDC," more "soak passengers for another round of deposits" ... but no actual work.

 

If indeed cruising is dead for the foreseeable future and nothing can be done to re-imagine cruises in a safe way ... the lay off 85 percent of the executives. Leave enough mid-level mangers to pay the bills & supervise refunds, payroll, taxes,

etc, but give the boot to the floods of leeches who are draining the coffers while providing zero value.

[Hlitner]

3 minutes ago, EscapeFromConnecticut said:

The problem is, the current crop of listless and clueless executives is NOT facing the issues. It's just slurping off money while watching the business sink.

 

Executives are paid to deal with crises. In this case, that means hiring experts to work with engineers, risk management specialists and attorneys to devise solutions ... or at least propose potential solutions.

 

Instead, Fain, Del Rio, Donald & their underlings keep soaking up the compensation while accomplishing nothing. More debt, more downsizing, more "blame the CDC," more "soak passengers for another round of deposits" ... but no actual work.

 

If indeed cruising is dead for the foreseeable future and nothing can be done to re-imagine cruises in a safe way ... the lay off 85 percent of the executives. Leave enough mid-level mangers to pay the bills & supervise refunds, payroll, taxes,

etc, but give the boot to the floods of leeches who are draining the coffers while providing zero value.

It almost pains me to defend the cruise line management teams, but we agree with another post that absolves them of most of the responsibility for the current situation.  Lets be honest, very few (perhaps nobody) could have predicted the impact of COVID.  In fact, I believe that we may still be in the beginning of this COVID mess and the situation will grow increasingly complicated for large cities, the travel industry, families, etc.  For example, I predict that a perfect storm has hit our major cities, especially NYC.  Many jobs in that city will be gone forever.  Taxes will need to increase to pay down the latest debt and that will likely lead to the higher paid taxpayers (who foot over 40% of the bill) moving from the city.  Real Estate values will fall, restaurants will fail to reopen, empty office space will become the norm.  Many of the jobs that used to force folks to commute to expensive office space will be replaced by much more cost efficient remote jobs.  And we should remember that decades of study have shown us that "safety and security" are the most important factor when folks have a choice where to live.  As major cities "defund" police and kowtow to various activists, many families will flea these areas for safer places that emphasize excellent security and effective police departments.  This will possibly make the so-called "white flight" of the 60s and 70s seem like a minor prelude to what is coming.  

 

As to transportation, business travel will never return to anything close to pre-COVID levels.  Corporations have been forced to replace travel with online conferencing and have found it is much more efficient.  We have seen this in our own family where DD has found work arounds which allow her to avoid previously necessary frequent business trips to Europe.  The cruise industry and the ships we love are really not very important to most economies with a few exceptions (such as South Florida).  Ports will be less inclined to allow large ships to dock since they now think that the downside of thousands of daytrippers outweighs the advantages.  I think the cruise industry will survive but it will be primarily short (7 day or less) cruises to fewer ports.  Long cruises may become less common with a majority happening on the smaller luxury vessels.  Many of us who are frequent cruisers (we often spend 100+ days a year cruising) will gradually move on to other forms of land travel where we can better control our own safety/security and health.  Lets face the facts, most folks cannot afford to gamble that they will be imprisoned on a ship for days, weeks or months (because somebody gets sick) and the cruise lines cannot answer the basic question of "what happens if a single person on a ship gets sick with COVID (or some other bug)?"

 

I cannot get a comment, made by a scientist friend, out of my head which is "cruise ships are merely petri dishes."  Despite the best efforts of experts, well understood viruses such as Norovirus remain a problem on ships.  Now we have COVID and one could predict that there will be other "Covids" in the future.  

 

So, getting back to the topic of cruise line executives it is just not reasonable for us to expect them to find reasonable solutions given the current structure of ships and the cruise industry.  I sure would not rush out to buy any more stock in cruise corporations any more then I would invest in large city real estate!

 

Hank

 

Hank

[ilikeanswers]

10 hours ago, navybankerteacher said:

It might be the smaller, older ships which will be kept on.  When the costs of health controls are figured in - compounded by the possible necessity of reducing passenger loads - fares might just be enough to make it impossible to attract enough of the budget-minded cruisers.  It is possible that cruising might revert to an activity for the relatively well-to-do that it was until about 20 years ago.  

 

It wont be just the problems lines having in attracting passengers - a lot of ports might no longer see ships bringing 5,000 or so budget-minded short term visitors as that much of a value.  

 

What I have been reading is that the big cruise ships will be kept and the small ones ditched because even at reduced capacity they are supposedly more cost effective to operate🤔.

Edited July 21, 2020 by ilikeanswers

[navybankerteacher]

35 minutes ago, ilikeanswers said:

 

What I have been reading is that the big cruise ships will be kept and the small ones ditched because even at reduced capacity they are supposedly more cost effective to operate🤔.

A good point - but it remains to be seen if mega-ship cruising will continue to thrive.  Depending upon the fares required to facilitate reduced capacity, the mass market customer base may shrink to a level that will not support previousl numbers.

 

  All developments in travel do not survive — the SST was a good example -  even before the Concorde went down in Paris twenty years ago, the service did not make sense economically — in spite of very high fares it had to be subsidized by BA’s and Air France’s core business.  Kind of a paradox — those wealthy enough to afford SST fares were riding on the profits earned from the economy class fliers.

Edited July 21, 2020 by navybankerteacher

[wowzz]

6 hours ago, Roger88 said:

If I am not mistaken, almost every company has announced that it will face major issues in the upcomming future but I didnt hear anyone really going bankrupt. I suppose its a marketing move in a way. I wonder how it has affected their market shares 

You don't need to wonder, share prices have collapsed, and enormous loans have been taken out at eye watering levels of interest.

[wowzz]

1 hour ago, navybankerteacher said:

All developments in travel do not survive — the SST was a good example -  even before the Concorde went down in Paris twenty years ago, the service did not make sense economically

Not helped of course by the political shenanigans of various countries, notably the US.

[navybankerteacher]

3 hours ago, wowzz said:

Not helped of course by the political shenanigans of various countries, notably the US.

I am certainly willing to concede that the US is capable of pulling shenanigans, but what did the US do to make the SST a non-economic enterprise?

[cbr663]

5 hours ago, navybankerteacher said:

A good point - but it remains to be seen if mega-ship cruising will continue to thrive.  Depending upon the fares required to facilitate reduced capacity, the mass market customer base may shrink to a level that will not support previousl numbers.

 

  All developments in travel do not survive — the SST was a good example -  even before the Concorde went down in Paris twenty years ago, the service did not make sense economically — in spite of very high fares it had to be subsidized by BA’s and Air France’s core business.  Kind of a paradox — those wealthy enough to afford SST fares were riding on the profits earned from the economy class fliers.

 

If cruise ships cannot sail safely, they should not survive.  Whether small or large, the preservation of human life must be paramount.  The reality is if all cruise lines go bankrupt before a vaccine is found or before they can figure out how to sail safely - so be it.  If and when this is over, new cruise companies will emerge.