Carnival Corp. to sell 13 ships, resume cruises in Germany amid COVID-19 pandemic
After record-breaking second quarter losses, Carnival Corporation will begin cruising again during the COVID-19 pandemic in August and shed 13 of its ships by the end of the year.
The company previously reported a loss of $4.37 billion, or $6.07 a share, during the second quarter — its largest quarterly loss ever — as cruises remain banned in the U.S. through at least late July.
While U.S. health authorities remain focused on curbing COVID-19 outbreaks among crews on cruise ships in U.S. waters, the cities of Hamburg, Kiel and Rostock, Germany, have given the industry the go-ahead to start cruises again next month. Carnival Corp.’s AIDA Cruises brand will begin cruises from those ports at less than 50% capacity starting Aug. 5, CEO Arnold Donald announced on an earnings call Friday. The passengers will stay on the ships during the entire cruise.
The company has already received around 1,000 bookings for the cruises, which went on sale Thursday.
“There’s a lot of pent-up demand,” he said. The company is eyeing Italy as a possible spot to start cruises next.
Investigation
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Outside of the AIDA 14-ship fleet, 53 of the company’s ships are anchored with just a skeleton crew on board, and the 35 others are expected to reach that status in the next month. Still, the company is burning through around $650 million per month on operations and capital commitments.
In an effort to lower its cash-burn rate, Carnival is offloading 13 of its ships this year — nine more than previously planned. So far the company has sold Costa Victoria from its Costa Cruises line and Oceana from P&O Cruises. The company is also slowing down its fleet growth; only five of the nine ships the company planned to add to the fleet in 2020 and 2021 are now scheduled to be delivered by the end of fiscal year 2021. The company has secured $10 billion in new capital, Donald said, enough to last “into late next year” even in a zero-revenue scenario.
Since the cruise industry halted operations worldwide in March, companies have been slow to repatriate all of their crew members as ships continue to experience COVID-19 outbreaks and some countries require companies to provide testing and quarantine facilities for returning crew. Around 3,000 of Carnival Corp.’s 80,000 crew members are still awaiting repatriation, Donald said.
Cruise bookings for 2021 remain in historical ranges, Donald said, meaning the COVID-19 pandemic has not shaken confidence in cruising as much as the Costa Concordia sinking in 2012 and the Carnival Triumph “poop cruise” in 2013.
“None of [our brands] or others have gone to the low levels we experienced at that time,” said Donald.
A Miami Herald investigation has found that at least 72 cruise ships — 28% of the industry’s ocean fleet — have been affected by COVID-19 and at least 95 passengers and crew members have died of the disease. At least 70 of those deaths were Carnival Corp. passengers and crew.
“We had less than our market share of incidents,” Donald said. “We had a disproportional amount of media attention.”
When AIDA cruises begin in August, the company said it will check passengers’ temperatures before boarding and require passengers to wear masks and maintain social distance. The ports are prepared to evacuate and quarantine sick passengers and crew on land if needed, according to a company spokesperson.
On Thursday, the United Kingdom warned citizens to avoid cruises. It cited medical advice from its public health authority.
Cruising in the company’s most lucrative market, North America, remains banned through July 24. COVID-19 cases in South Florida, where Carnival Corp. has its headquarters, continue to surge. Members of the cruise industry lobbying group Cruise Lines International Association, including Carnival Corp., have canceled all U.S. cruises through mid-September.
The Miami Herald interviewed five doctors, three of whom treated COVID-19 patients on cruise ships, about what cruise companies can do to keep passengers and crew safe if companies resume operations before a vaccine is available. They recommend cruises operate at 50% capacity and stay within 500 miles of land. They said cruise companies should test passengers for COVID-19 before boarding, provide flexible cancellation and refund policies, and arm ships with more medical staff and ventilators, among other things.
