As the Miami Herald reported this week in an article titled Top U.S. Cruise Lines Set to Allow Passengers Without COVID-19 Shots on Most Voyages, “Royal Caribbean and the other major cruise lines are moving to soon allow passengers to board most voyages without COVID-19 shots.”
The “big three” cruise companies, Carnival Corporation, Royal Caribbean, and Norwegian Cruise Line Holdings, have also recently rolled back their policies of requiring pre-cruise COVID-19 testing for most guests boarding their cruise ships.
Not coincidentially, all cruise lines have announced an explosion in the sale of cruises. The Miami Herald reports that:
“Carnival said its sales nearly doubled on Aug. 15 — the first business day after announcing that unvaccinated people would be welcomed aboard sailings shorter than 16 nights starting Sept. 6 — compared to bookings the same day in 2019. (emphasis added)
Officials of Norwegian, which will permit passengers on all sailings regardless of vaccination status beginning Sept. 3, told investors in a recent quarterly earnings call that announcement was ‘an instant catalyst’ for a deluge of reservations.”
Saddled With Over $73,000,000,000 (Billion $$) in Debt Big Three #Cruise Lines Move to Abandon COVID-19 Vaccination & Relax Testing https://t.co/1N5OrdN1oK COVID19 has "adapted to not kill us and to have us go out into crowds so it can spread; that’s what the virus wants…" 1/2
— James (Jim) Walker (@CruiseLaw) August 24, 2022
The Washington Post recently published Welcome Aboard, Unvaccinated Cruise Passengers where the newspaper reported that as cruise lines drop vaccine and testing rules, companies are seeing a ‘huge spike” in bookings.”
CCL, RCL and NCLH Are Imploding With Over $73,000,000,000 in Debt – Is Bankruptcy on the Horizon?
While reporting that most cruise lines are dropping vaccine requirements, the Herald did not report on the obvious fact that all three of these large cruise companies are struggling with enormous debt which places their continued viability in jeopardy.
One analyst (Motley Fool) recently explained the stark finacial reality which cruise lines are now facing:
“Cruise companies are laden with debt — $36.4 billion at Carnival, $23.8 billion at Royal Caribbean, and almost $14 billion at Norwegian Cruise. Interest rates are climbing, and the higher they go, the more expensive it gets for cruise stocks to service their debt — and the longer it will take these companies to return to profitability (if they even can).”
The same analyst further explained that the cruise lines’ cost of servicing the over $73,000,000,000 in combined debt which CCL, RCL and NCLH are facing, is over 11% a year in interest, an amount which no cruise line has ever netted in profits in a year:
“Royal Caribbean confirmed that its new $1 billiion + debt will cost 11.625% in annual interest. That’s more than triple what the old debt that gets rolled over used to cost, inasmuch as that old debt was paying (interest) only between 2.875% and 4.25%.
Royal Caribbean will incur expenses to service its $23.8 billion debt load in future years. . .. If Royal Caribbean spent $1.3 billion on the interest on its debt in 2021, a tripling in interest rates would indicate interest on debt would be $3 billion or even $4 billion a year.
Given that even in its most profitable year ever — 2019 — Royal Caribbean didn’t generate even $2.1 billion in operating profit, the potential for interest costs rising past $3 billion calls into question Royal Caribbean’s ability to ever return to profitability (without even considering the effects of future inflation).
Meanwhile, if Carnival and Norwegian Cruise sail a similar route, their interest costs could soar toward $4.5 billion and $1.8 billion, respectively. And — you guessed it — neither Carnival nor NCL have ever earned that amount of pre-interest costs operating profit, either, potentially putting those two in a similar bind.”
“Carnival Corporation: The Perfect Storm”
Another analyst (Seeking Alpha) concludes that although revenue has increased at Carnival Corporation, the cruise giant suffers from a “continuous deterioration” and its financial structure is now “completely compromised after 2 years of huge losses.” He suggests that Carnnival’s $35,000,000,000 in debt has more than tripled, and there are stringent covenants limiting corporate maneuvering. Meanwhile, “COVID-19 difficulties are still persisting.” He writes of the contining effects of COVID-19 on the cruise line:
“To date, what is left of the 2019 Carnival is very little. The cruise industry has been hammered by repeated difficulties and there is still no end in sight. In 2020 COVID-19 destroyed the entire industry . . . ”
"Carnival Corporation: The Perfect Storm" https://t.co/lZfe4vOCWe Debt of +$36,000,000,000 more than tripled. Can #cruise giant sustain paying $billions in high interest? "Covid-19 difficulties still persisting" – to date, "what is left of the 2019 Carnival is very little" 2/3…
— James (Jim) Walker (@CruiseLaw) August 25, 2022
The Cruise Industry Has Opted to Improve its Bottom Line at the Expense of the Health and Public Safety of its Employees and the Traveling Public
Faced with the extreme financial pressures created by crippling debt and the ongoing difficulties presented by COVID-19, the cruise industry has decided to try and improve its bottom line by essentially abandoning its COVID-19 vaccine and testing protocols and inviting unvaxxed customers aboard.
When the Centers for Disease Control and Prevention (CDC) stopped reporting to the public COVID-19 cases on cruise ships in July, 100% of the approximately 100 ships sailing from U.S. ports had at least 3% of the guests and crew testing positive for COVID-19. For the last six months, we have reported that there are routinely cruise ships with between 100 to 200 passengers and crew positive for the virus.
The Washington Post reported this week that cruise ships “reported nearly 15,000 cases between Dec. 30 and Jan. 12, the agency said.” This averages more than 150 infected passengers and crew per cruise ship.
Last December, the CDC warned that all travelers should avoid cruise travel during the omicron surge.
Ships reported nearly 15,000 cases just between December 30 through January 12.https://t.co/R4rneqCUBT
— Friends of the Earth (Action) (@foe_us) August 23, 2022
In the aforementioned Washington Post article, over 100 readers left comments bemoaning the cruise industry’s dropping of vaccine and testing policies. Here are just a few:
“. . . It’s very foolish for the cruise lines to drop the vaccination requirement – and dangerous. We always sail on the smaller more expensive luxury lines and feel very safe. But now I have read that even our favorite line will be dropping the vaccination requirement – if that is the case, we are so disappointed that they will lose our business. We’ll not cruise with them or anyone again until we see how this disastrous change of policy works out. Goodbye cruising for now.”
“Just got off a European river cruise where everyone was required to be vaccinated. Nonetheless 1/3 of passengers came down with COVID on the 15 day cruise. Things are about to get worse.”
“They may have had a pent-up demand surge for a couple of days after the announcement, but once the next big outbreak happens lots of people will join me in finding safer ways to travel.”
You can read all of the comments here.
Cruise Lines: Cooperating with the COVID-19 Virus?
The Miami Herald quoted Dr. William Greenough, an infectious disease specialist at The Johns Hopkins University School of Medicine, who advocated continued COVID-19 testing of everyone on a cruise ship. Dr. Greenough talks about COVID-19 and its new co-dependant friend, the cruise industry:
“It’s adapted to not kill us and to have us go out into crowds so it can spread; that’s what the virus wants, so the cruise ships are cooperating with the virus . . . ”
Double-Whammy: Cruise Lines Scrap COVID-19 Rules while Hiding the Number of Infected on Ther Ships
Members of the public who are considering taking a cruise are now facing a doule-whammy: cruise lines (and the CDC) are refusing to disclose the number of passengeers and crew infected with COVID-19. At the same time, the cruise lines are, in most situations, scrapping their vaccination and testing policies. At this point, the cruise lines’ financial desperation has resulted in a brazen gamble to forego basic disease prevention and monitoring simply to attract new income to their fast-sinking businesses.
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Top – photo image: Sinking of the luxury liner Oceanos after taking on water in rough seas during a voyage around the coast of South Africa in 1991 – Getty Images via BBC.