How Long Can Princess Stay A Cruise line?

[geocruiser]

I am just think about how long can Princess Cruise line stay afloat with no cruises sailing.  They still have ships to maintain.  Each ship has expenses, Officers, crew and fuel and repairs to keep it running.   Plus shore side staff.  They have not sailed and will not sail for a while.  How long can Princess stay a float before they fold?  Of course Princess can sell off some ships, but will they get buyers and at what price.

What is you view point on this?

[dan4182]

For as long As Carnival Corporation wants to keep them in business.

[geocruiser]

1 minute ago, dan4182 said:

For as long As Carnival Corporation wants to keep them in business.

Very true.  But isn't the whole Carnival Corporation in the same "Boat" as Princess?

[Potstech]

Only the Shadow knows.

[stevenr597]

How long can Marriott, Hilton, Sheraton stay in business.  The cruise lines can put their ships into a “cold shutdowns”  and furlough most of the employees.  They do not have the taxes that the hotels still have to pay, and in that most of their staff is foreign, the salaries are much less.  

I expect to see a much leaner operation, with fewer ships, and more expensive rates.  Princess will be around, as well as Celebrity.  I do have doubts about Holland America and even Cunard.  Azamara may not survive.  

I would expect to see the cruise liners  back in operation towards the end of this year, or the beginning of the next. 

[casofilia]

Personally I would suggest that if you are able to book a refundable deposit cruise you want to do to book it now especially if you can get a deal which would mean you don't lose very much if the cruise line goes under.   When cruising starts again I would bet that prices will be far higher than being offered now,   That would be especially true the longer the down time goes on and if the 50% full is still in action.

[skynight]

Believe they will return.  

[neverbeenhere]

Without sailing: 443 days   Then it would emerge as Princess II.

[Travlin grrl]

I'm sure they will come back. The cruise lines create revenue for so many other businesses. Like a trickle down effect.

If you think about the average of maybe 3000 people X 18 ships that have to use airlines to get to the ship, hotels, restaurants, ride share or taxi's, excursions, and all the people that are employed at the docks, and food suppliers etc. That's a lot of jobs that rely on the cruise industry. It would be a shame to lose that. 

[MISTER 67]

3 hours ago, geocruiser said:

Very true.  But isn't the whole Carnival Corporation in the same "Boat" as Princess?

All the cruise lines are in the same boat.

[Tolkmit]

Carnival Corporation told it's shareholders (meaning there are legal consequences if they lied) that they have enough funding lined up to survive until summer of 2021 without cruising, which makes sense honestly. Cruises have the advantage of being able to cut so much more of their expenses than a lot of other businesses. They mostly use contract workers, so they can cut staffing costs dramatically. They also drastically cut food and fuel costs.

 

The concern for cruises is more if they can make enough money when they do restart. They have a lot of liabilities, both in loans taken and future cruise credits given out. When they restart, costs will go back to normal; but they will need people booking cruises to get back to normal quickly enough to cover those liabilities, or they will be in trouble.

[geocruiser]

42 minutes ago, Tolkmit said:

Carnival Corporation told it's shareholders (meaning there are legal consequences if they lied) that they have enough funding lined up to survive until summer of 2021 without cruising, which makes sense honestly. Cruises have the advantage of being able to cut so much more of their expenses than a lot of other businesses. They mostly use contract workers, so they can cut staffing costs dramatically. They also drastically cut food and fuel costs.

 

The concern for cruises is more if they can make enough money when they do restart. They have a lot of liabilities, both in loans taken and future cruise credits given out. When they restart, costs will go back to normal; but they will need people booking cruises to get back to normal quickly enough to cover those liabilities, or they will be in trouble.

Great point.  I was wondering how long their funds would hold out for.  Then I wonder how long it will take to get in place all the needed crew?  And of course, will PAX return to take cruises.  For us, I don't see us going until at least after the 2021 season.

[Altidude]

I believe Costa is sailing this week and AIDA is sailing November 1st . I think they are sailing to Canary islands,

etc. It's a start.

[getting older slowly]

Please do not think cold lay up is saving lots of money.... from figures quoted on various shipping sites and finance sites.   they bandy about 55-60% of normal running cost for warm layup and 30-35% of normal cost for cold layup ( plus the cost of bring out of cold layup )

 

So when you are talking millions a month to have a ship at anchor doing warm layup, so cold layup it is still a lot of money going out with no income...

 

CCL may reduce their offering in the way different lines and ships.....

 

We will not know until cruising start and how all the countries are willing to accept cruise ships.

 

Cheers Don

Edited September 4, 2020 by getting older slowly

[brisalta]

36 minutes ago, getting older slowly said:

Please do not think cold lay up is saving lots of money.... from figures quoted on various shipping sites and finance sites.   they bandy about 55-60% of normal running cost for warm layup and 30-35% of normal cost for cold layup ( plus the cost of bring out of cold layup )

 

So when you are talking millions a month to have a ship at anchor doing warm layup, so cold layup it is still a lot of money going out with no income...

 

CCL may reduce their offering in the way different lines and ships.....

 

We will not know until cruising start and how all the countries are willing to accept cruise ships.

 

Cheers Don

 

If cold lay up is over a long period of time getting a vessel ready to sail becomes extremely expensive. Think what happens when there is no HVAC to keep the interior warm and free of condensation. Corrosion of other parts, etc. from sitting idle.

I suspect one or more of the marine engineers on this board could expound at length on this topic.

Edited September 4, 2020 by brisalta

[CineGraphic]

CCL currently has enough cash on hand to last through June of 2021 with no sailings.

They are burning through $650 million per month.

 

 

[satxdiver]

What I read lately was that CCL has options even after their current money runs out to extend their survival to the end of 2021 without a single cruise.  RCL and NCL are in similar situations being able to stay afloat to the end of 2021.  

[npcl]

Keep in mind that there are really 2 separate issues here.

 

The first is having sufficient funds to survive until they cruising restarts.  That they probably have.

 

The second is that they have enough money to successfully restart most of their ships, and be able to make enough money to deal with their rather large increases in debt they have taken on to have enough money to survive.  That is a bit more iffy.

 

I would not be surprised if one or more of the major cruise lines restart, but then restructure within a year after restarting.

 

[Hlitner]

Folks like to think that CCL can muddle through until the summer of 2021.  Even if we accept this as fact, what makes anyone think that cruises will be able to resume by the summer of 2021?  I suspect that most who believe that will happen would have told you last February that cruises would be back to normal by now.P

 

So lets deal with facts.  At the current time nobody knows when (or if) the cruise industry will be able to return to some degree of normalcy.  Despite optimistic claims that we will soon have a safe/effective vaccine...the truth is that a vaccine is still a big question mark. I could have retired early (I did) on a bet against vaccine candidates in Phase 3 trials that never successfully made it to market.  In fact, I had to shake my head when reading of the new Russian vaccine which was tested for a few months on only 76 people.  It turns out that nobody in the Russian Phase 2 trial was over age 60!  Although their vaccine does apparently produce antibodies (in those under the age of 60) nobody knows how long those antibodies will survive of if they even prevent anyone from getting COVID.  I guess those of us old enough to remember Thalidomide understand the risk of rushing things into widespread use without adequate testing.

 

Hank

[mnocket]

As an interesting side note:   Crystal Cruises parent company has announced that it has stopped making payments to creditors.  Sounds like they will probably have to reorganize under bankruptcy.  Crystal Cruises says that no matter what happens, they will continue to operate as a cruise company and they are still making refund payments.

[AF-1]

Here is the latest info from Gene Sloan who writes travel articles for The Points Guy website

 

 

https://thepointsguy.com/news/will-your-cruise-line-go-bankrupt/?utm_source=TPG Daily Newsletter&utm_medium=email&utm_campaign=1498226&utm_usr=d71cfa99661cdf4bb41015e70984d9b272d983d2755d5d34a613670195c92ee9&utm_msg=df2a623012074dcb86626473fa9d7e70&utm_date=2020-09-04

[geocruiser]

I have another question.  I have read here that Princess has money to stay afloat until mid next year or so.  Is this money from their profits, of borrowed?

[Paula_MacFan]

31 minutes ago, geocruiser said:

I have another question.  I have read here that Princess has money to stay afloat until mid next year or so.  Is this money from their profits, of borrowed?

They borrowed at high rates earlier in the pandemic.  There have been many discussions here regarding this.  I'm sure several others will chime in who have discussed it at length previously.  

 

https://www.barrons.com/articles/carnival-pays-steep-rates-for-nearly-6-billion-in-new-debt-51585834262

 

https://www.ft.com/content/25da30c9-8c45-42fc-8fbe-fc1f32c9bc4a

 

Edited September 5, 2020 by Paula_MacFan

[npcl]

29 minutes ago, geocruiser said:

I have another question.  I have read here that Princess has money to stay afloat until mid next year or so.  Is this money from their profits, of borrowed?

CCL, like the other major cruise companies, had very little cash on hand at the start of the shutdown.  Only around 500 million or so while having 4.5 billion on the liability side for deposits and cruise fares received (subject all of the cash received for cruises not yet taken and they were at negative 4 billion in on hand cash if they had to refund all of the deposits. Thus the push to get as many people as possible to take FCCs)  Since then they raised money by selling bonds (as high as the 11% range) selling stock, and selling convertible bonds.

[geocruiser]

Paul_Macfan & npcl,

 

So they owe a lot of money and nothing coming in except payments on future cruises.  This does not look too good. Thank you both for the info.