The cruise industry won’t get a bailout in the $2 trillion coronavirus relief bill
The cruise line industry will be shut out of a $2 trillion coronavirus relief package that is expected to become law in a matter of days.
The industry, responsible for nearly $9 billion in annual economic impact to Florida, will not get access to $500 billion set aside by Congress for large corporations to recover from a government-inducted recession to slow the spread of COVID-19.
That’s because the largest cruise companies are registered overseas.
While the three largest cruise companies are all headquartered in Miami, they are registered in other countries: Carnival Corporation in Panama, Royal Caribbean Cruises Ltd. in Liberia and Norwegian Cruise Line in Bermuda.
The fourth largest company, privately held MSC Cruises, has a U.S. headquarters in Broward County, but is based in Switzerland. Their ships are registered abroad too, including in the Bahamas, Panama, Bermuda, Italy, Malta and the Netherlands.
President Trump has publicly supported the cruise industry; he and Carnival Chairman Micky Arison have a personal acquaintance. Still, the industry trade group Cruise Line International Association said it did not seek a bailout. In a statement, the group said it is grateful many travel agents will be able to access federal assistance during this time.
“For the more than 421,000 people in the United States whose jobs are supported by the cruise industry, we will continue to work with policymakers to help our community recover from the impact of this pandemic,” CLIA said in a statement.
Two congressional sources confirmed to the Miami Herald that the bill currently does not allow cruise lines to access the money. The bill is expected to pass the House of Representatives on Friday or Saturday without significant changes from the version that passed the U.S. Senate 96-0 on Wednesday night, and President Donald Trump is expected to sign it into law.
Trump said Thursday he wants cruise companies to be based in the United States and pay U.S. taxes.
“I do like the concept of, perhaps, coming in and registering here. Coming into the United States,” Trump said at Thursday’s daily briefing on the coronavirus response. “It’s very tough to make a loan to a company when they’re based in a different country.”
Trump’s remarks came after a number of conservative senators, including Florida Republican Sen. Rick Scott and Missouri Sen. Josh Hawley, argued that large companies like cruise lines should not get bailouts, especially if they aren’t based in the U.S.
“I was very clear about my opposition to bailouts for big corporations,” Scott said in a statement after voting for the bill. “While I still fear this bill could be used to provide relief to companies that can afford to take care of their workers without government assistance, I’m glad to see it requires a return on investment for the taxpayers.”
But other Florida lawmakers said help for the cruise industry could come in future legislation.
“I don’t believe there is express direct assistance for the cruise line industry in this package,” Rep. Debbie Wasserman Schultz, D-Weston said on a press call on Thursday. “There is a focus on our small businesses, but it’s important to note this is not going to be the last piece of legislation.”
Rep. Ted Deutch, D-Boca Raton, said Thursday “it’s important” for the cruise industry to get economic relief from the federal government, because the industry employs so many people in Broward and Miami-Dade counties.
According to CLIA, the cruise industry is responsible for 150,000 Florida jobs and $7.7 billion in wages. The three major lines have about 10,000 employees based in South Florida. About 60% of North America’s 14.2 million 2018 passengers boarded through PortMiami and PortEverglades.
Cruising also supports food purveyors, florists, interior designers, taxi and Uber drivers, bus companies, luggage handlers, airlines, hotels and travel advisers.
The three public companies — Carnival Corp., Royal Caribbean Cruises and Norwegian Cruise Line Holdings — claim exemption from U.S. income taxes. In 2019, Carnival Corp. reported a global income tax expense of $71 million on $20.83 billion in revenue. Royal Caribbean Cruises reported a global income tax expense of $32.6 million on $10.95 billion in revenue. Norwegian Cruise Line Holdings reported an income tax benefit of $18.86 million on $6.46 billion of revenue.
The vast majority of cruise company employees are not U.S. citizens; 85-92% of them work on cruise ships, according to financial filings.
During trading Thursday, shares of Carnival Corporation spiked 14.6%, while shares of Royal Caribbean Cruises and Norwegian Cruise Line Holdings slid further, down 4.2% and 7.4%, respectively. Since the start of the year, cruise industry stock prices have plummeted. Shares of Carnival Corp. closed at $17.82 Thursday, down 65.27% since Jan. 2; Royal Caribbean Cruises shares closed at $40.61, down 69.84%; Norwegian Cruise Line Holdings closed at $15.72, down 73.3%.
Congress is likely to consider an additional coronavirus relief bill in the coming weeks as Washington continues to respond to a massive economic crisis. House Speaker Nancy Pelosi said Thursday she is already working on the next coronavirus relief bill.
The cruise industry is a political player in South Florida, where most of their offices are based. Miami Democratic Reps. Frederica Wilson and Debbie Mucarsel-Powell are among the top 20 members of Congress to receive money from the industry during the 2020 election cycle, according to the Center for Responsive Politics.
“The cruise line industry is a vitally important one in South Florida,” Deutch said.
