Where does HAL stand in the Carnival Corporation queue for a potential restructure?

[mcrcruiser]

Hank  I take out  vendor default within my cruise insurance  policies  . I have seen this type of financial   problem before   . It did not end well 

[mcrcruiser]

There is the possibility  that companies like MSC  or  Virgin  could be waiting  patiently  on the side lines with huge cash   pockets  to buy ships on the cheap  .  

 

 In todays financial environment  any company needs to  conserve it's cash  & free cash flow  . Yes there could even be buys of .10 cents on the dollar of assets ,  Seen this before as well 

 

 

[HappyInVan]

Here's my take. Its normal for conglomerates to over-expand during the good times, particularly when money is cheap. The real test of senior management comes when the bad times roll around.

 

The company needs to focus and prioritize during this crisis. Planning a fighting retreat to stay alive. Make no mistake, CCL faces insolvency this winter if its a repeat of last winter.

 

In the cruise industry, there are two main types of customers. The vacationers and the travellers.

 

The vacationers have just 3-7 days vacation from their jobs. Many will have their families with them. So, the cruise industry is in competition with Disney World etc. The ships need to get bigger, in order to build the mini-amusement parks, breath taking atrium, multiple F&B outlets, lavish Vegas shows etc. And, to lower cost per pax.

 

These pax expect convenience, very competitive prices and the Wow factor. In the cruise industry, this is the equivalent of the McDonald restaurants.

 

On the other hand, the travellers are retirees and the leisured $$$ class. They favour longer voyages to exotic places. Willing to pay higher prices for quality experiences. $500-$1,000/nite on small ships. More than $1k/nite to ride on the ships' RHIB in the Galapagos or the Arctic.

 

The Carnival brand caters primarily to vacationers. Cunard and Hal is favoured by travellers. The $$$$ pax gravitate to Seabourne.

 

The problem is everything in between. Costa is a Mediterranean brand. Do they need 12 ships? Aida serves the Germans. Do they need 12 ships? Princess' latest ships take 5k pax. Does it make sense to compete with Carnival brand?

 

Is there over-capacity when Princess/HAL's marginal prices matches Carnival?

 

In order to raise money and reduce losses, should CCL transfer ships or sell brands? Does it make sense to merely transfer Costa ships to Carnival brand when their market is saturated. Should CCL sell Aida/Costa, or Cunard/HAL?

 

 

[mcrcruiser]

Test of time  .During the  next 5 to 6  months  much will be known  as to where CCL is headed as well as RCL & NCHL brands .  I just made some profits selling the CCL stock I just bought    .  This bear market bounce will not last much  linger  .Right now I am in a cash position after taking  nice profits off the table    .Looking to short  this market  once again with a triple  S&P  short symbol  

[Hlitner]

2 hours ago, mcrcruiser said:

There is the possibility  that companies like MSC  or  Virgin  could be waiting  patiently  on the side lines with huge cash   pockets  to buy ships on the cheap  .  

 

 In todays financial environment  any company needs to  conserve it's cash  & free cash flow  . Yes there could even be buys of .10 cents on the dollar of assets ,  Seen this before as well 

 

 

We have become fans of MSC's Yacht Club (which will be our next cruise) as we think they provide the best "value" in the entire cruise world.  MSC is now in the process of starting a new luxury cruise line called "Explora Journeys" which will have their first ship delivered in the Spring of 2023.  They have a total of 6 ships (each about 900 passenger) on order or under option.  Although nobody can evaluate a product that has yet to sail, we expect it to compete in the same market as Seabourn, Crystal (now being reborn), and Silverseas.     I mention this because I do not see MSC having interest in buying older ships "on the cheap."  MSC is already expanding (about 2 new ships a year) plus they have that new cruise line. 

 

 We have been hesitant to recommend MSC to friends since it is a somewhat unique product that has its pros and cons.  Our next MSC cruise is in the Yacht Club of the Seashore.  This is a ship that carries over 4000 passengers of which about 200 are in the Yacht Club.  The Yacht Club is a true "ship within a ship" with its own section of the ship (entrance requires a key card) with its own restaurant, buffet, sun deck, lounge (with nightly entertainment), butlers, 24 hour concierge, etc.  One could actually spend their entire cruise in the Yacht Club enclave if that was their choice.  We love that we can cruise in the luxury enclave but also take advantage of the "Carnival" atmosphere and many venues that are outside the Yacht Club.  The last time we cruised on MSC I walked around at 11:00 and counted 6 different entertainment venues with live music including rock, country, jazz, and classical!  And they also have nightly production shows.  I once described our MSC experience by telling a friend to imagine being on a luxury cruise ship that was attached to a Carnival mega-ship.  For us it is the best of both worlds but some might say it is the worst of both worlds :).

 

Hank

[rkacruiser]

5 hours ago, Hlitner said:

The Yacht Club is a true "ship within a ship" with its own section of the ship (entrance requires a key card) with its own restaurant, buffet, sun deck, lounge (with nightly entertainment), butlers, 24 hour concierge, etc.  One could actually spend their entire cruise in the Yacht Club enclave if that was their choice.  We love that we can cruise in the luxury enclave but also take advantage of the "Carnival" atmosphere and many venues that are outside the Yacht Club.  The last time we cruised on MSC I walked around at 11:00 and counted 6 different entertainment venues with live music including rock, country, jazz, and classical!  And they also have nightly production shows. 

 

This is what I enjoyed when I was a YC guest on Meraviglia!  The choices!  Yet, the ambiance of YC which, at this point in my life, I really like.  As to the type of music, you overlooked (maybe wasn't offered when you sailed?), a mini-performance of La Boheme with a male and female performer who had voices that did the music justice.

 

8 hours ago, HappyInVan said:

The problem is everything in between. Costa is a Mediterranean brand. Do they need 12 ships? Aida serves the Germans. Do they need 12 ships? Princess' latest ships take 5k pax. Does it make sense to compete with Carnival brand?

 

Your questions are the same as mine.  

 

There is, or at least once was, a market for a cruise line that was marketed as an "Italian" brand.  Sitmar and Home Lines were well liked and did well during their times.  MSC is "Italian" and is doing well, as far as I know.  Costa has never done more than "tip-toe" in the North American cruise market and has had mixed reviews when they did (just as MSC received when they entered our market).  Perhaps, a more "vigorous" marketing attempt by Costa, with some of their best ships, would be worthwhile?  I don't want them to compete with Carnival or Princess just because many of the Officers on Carnival or Princess are Italian.  Carnival's and Princess' vibe is not Italian.  Costa could--if done correctly--be "Italian".  

[HappyInVan]

8 hours ago, rkacruiser said:

There is, or at least once was, a market for a cruise line that was marketed as an "Italian" brand.  Sitmar and Home Lines were well liked and did well during their times.  MSC is "Italian" and is doing well, as far as I know.  Costa has never done more than "tip-toe" in the North American cruise market and has had mixed reviews when they did (just as MSC received when they entered our market).  Perhaps, a more "vigorous" marketing attempt by Costa, with some of their best ships, would be worthwhile?  I don't want them to compete with Carnival or Princess just because many of the Officers on Carnival or Princess are Italian.  Carnival's and Princess' vibe is not Italian.  Costa could--if done correctly--be "Italian".  

 

Sitmar was active in the 1960s-1980s. The industry is very different today. 

 

That said, Costa faces the classic problems outside its home market, because of culture and language. Ideally, AIDA and Costa should operate smaller ships in North America, not 5k pax behemoths.

In fact, I have doubts about whether 5k pax giants are appropriate for old European cities and island ports.  

 

[ski ww]

Boy, lots of doom & gloom. I hope things pick up. I guess now is the time to buy CCL stock, it would pay for itself in a very short time if you cruise a lot of long cruises. 

[Gail & Marty sailing away]

27 minutes ago, ski ww said:

Boy, lots of doom & gloom. I hope things pick up. I guess now is the time to buy CCL stock, it would pay for itself in a very short time if you cruise a lot of long cruises. 

You being 4 star could have collected a few times.

[rkacruiser]

15 hours ago, HappyInVan said:

 

Sitmar was active in the 1960s-1980s. The industry is very different today. 

 

That said, Costa faces the classic problems outside its home market, because of culture and language. Ideally, AIDA and Costa should operate smaller ships in North America, not 5k pax behemoths.

In fact, I have doubts about whether 5k pax giants are appropriate for old European cities and island ports.  

 

 

I don't see AIDA's product gaining a foothold in the North American market.  Costa's "language" issues can be resolved and just because Home Lines/Sitmar's Italian vibe was of yesteryear does not mean than such would not have appeal--if properly marketed--today.  Italian cuisine--in my opinion--is a popular cuisine in many parts of North America.  

[Mary229]

58 minutes ago, rkacruiser said:

 

I don't see AIDA's product gaining a foothold in the North American market.  Costa's "language" issues can be resolved and just because Home Lines/Sitmar's Italian vibe was of yesteryear does not mean than such would not have appeal--if properly marketed--today.  Italian cuisine--in my opinion--is a popular cuisine in many parts of North America.  

My first Alaskan cruise was on Princess and it was an all Italian crew from the captain to the busboy.   It was lively, it was fun and it was fattening.  I think the cross Costa-Carnival experiment is interesting.  

[rkacruiser]

2 minutes ago, Mary229 said:

My first Alaskan cruise was on Princess and it was an all Italian crew from the captain to the busboy.   It was lively, it was fun and it was fattening.  I think the cross Costa-Carnival experiment is interesting.  

 

I agree.  There is a market for such an ambiance, I think.  

 

There is a problem with that all Italian ambiance, though.  On my most recent Princess cruise, the crew were clearly interdenominational.  A Thai Cabin Stewardess was my "first shock" with this change.  No problem, though.  The young woman did an excellent job.  

[HappyInVan]

I've been negative on CCL for some time because of its over-expansion, and poor response to the pandemic. Its not just my opinion. The market (many buyers and sellers) agree.

 

CCL's market capitalization is just $9.1b today, on sales (last FY) of $9.6b. By comparison, NCLH (only 3 brands) has a market cap of $5.4b today, on historical revenue of just $2.4b.

 

https://www.cnbc.com/quotes/CCL?qsearchterm=

 

https://www.cnbc.com/quotes/NCLH?qsearchterm=

 

 

I'm waiting for CCL (10 brands) to rise above the knee-jerk reflex of trying to fill the ships. To attend to the critical need for strategic management of their brands.

 

[mcrcruiser]

10 hours ago, HappyInVan said:

I've been negative on CCL for some time because of its over-expansion, and poor response to the pandemic. Its not just my opinion. The market (many buyers and sellers) agree.

 

CCL's market capitalization is just $9.1b today, on sales (last FY) of $9.6b. By comparison, NCLH (only 3 brands) has a market cap of $5.4b today, on historical revenue of just $2.4b.

 

https://www.cnbc.com/quotes/CCL?qsearchterm=

 

https://www.cnbc.com/quotes/NCLH?qsearchterm=

 

 

I'm waiting for CCL (10 brands) to rise above the knee-jerk reflex of trying to fill the ships. To attend to the critical need for strategic management of their brands.

 

Good luck with your wait on CCL  . it is not their style   They  position all their departments to the task to fill their ships 

[Mary229]

10 hours ago, HappyInVan said:

I'm waiting for CCL (10 brands) to rise above the knee-jerk reflex of trying to fill the ships. To attend to the critical need for strategic management of their brands.

If you want to sell an asset you need to present it as desirable, a full ship makes a much more compelling asset than an empty one

[mcrcruiser]

11 minutes ago, Mary229 said:

If you want to sell an asset you need to present it as desirable, a full ship makes a much more compelling asset than an empty one

 Agree right on target !

[PACD_JG]

13 hours ago, HappyInVan said:

I'm waiting for CCL (10 brands) to rise above the knee-jerk reflex of trying to fill the ships.

 

Perhaps you'd like some tunes to go along with your manifesto.