Coronavirus Could Pose Threat to Cruise Ship Credit Ratings

The cruise ship Diamond Princess is docked at the port of Yokohama, south of Tokyo, in this photo taken by Kyodo February 7, 2020. Mandatory credit Kyodo/via REUTERS

The impact on cruise companies’ earnings from cancelled trips, steep discounts and ships quarantined over coronavirus concerns could pose credit risks, said rating agencies Moody’s Investors Service and S&P Global Ratings.

Carnival Corp and Royal Caribbean Cruises said last week that scrapped itineraries in Asia due to the outbreak would affect their earnings per share more than expected. Norwegian Cruise Line Holdings on Thursday forecast an impact of 75 cents per share on full-year adjusted earnings, citing virus-linked fallout.

“It reduces the flexibility that these companies have in their rating categories,” said Moody’s analyst Peter Trombetta. “It removes some of their cushions.”The earnings impact on both Carnival and Royal Caribbean were deemed “credit negative” by Moody’s although neither company’s credit ratings were immediately affected.

In a note published on Wednesday, S&P Global analysts wrote that the impact on Carnival’s cash flow from the coronavirus outbreak is expected to drive leverage above the 2.5 debt to EBITDA ratio is 2020, the threshold that would normally warrant a downgrade if breached. However, if the analysts believe the impact on Carnival to be temporary and that leverage could be lowered within a year or two, they do not expect to downgrade the rating.

Financially, “Carnival would be impacted the most. They also have the most capacity in China. So they would probably see the biggest hit to earnings,” said Trombetta.

In response to a request for comment, a Carnival spokesman said, “The primary impact on the cruise industry is focused mostly on China, which is an emerging market for the cruise industry, so the impact is relatively small.” Neither Royal Caribbean nor Norwegian responded to a request for comment.

While the outbreak casts a shadow on the cruise industry in the short-term, credit analysts said they did not expect the effect to be lasting.

“We have very short memories,” said Trombetta, citing disasters like the wreck of the Costa Concordia ship in 2012, which killed 32 people. “People want to go on cruises. Once some time passes, that demand – so far – seems to keep coming back.”

Fitch Ratings, the third of the three largest credit rating agencies do not publicly rate the cruise companies, but analyst Colin Mansfield, who covers the gaming, lodging and leisure sectors, said he expected the consequences of the epidemic to be temporary.

And yet, Norwegian Cruise Line Chief Executive Frank Del Rio noted on a call with investors on Thursday that the coronavirus in particular “has caused near panic in the travelling public.”

“The decrease in bookings is similar to what we see – we have seen in past similar events, whether they be geopolitical during the financial crisis, et cetera. What’s a little bit different about this one is the increase in cancellations.”

That bias could create longer-term problems for the industry. There is some potential for “a softer demand picture in general if cruise gets some bad PR from this that sticks in peoples’ minds for any period of time,” said Paul Golding, analyst at Macquarie Capital. (Reporting by Kate Duguid; Editing by Megan Davies, Steve Orlofsky and Daniel Wallis)(c) Copyright Thomson Reuters 2019.

Celebrity Edge to Feature All-Female Leadership Team

Celebrity Edge

Celebrity Cruises has announced that that the Celebrity Edge will feature an all-female leadership team for a March 8, 2020 departure, marking International Women’s Day.

Celebrity Captain Kate McCue will be at the helm of the 2018-launched ship for the week-long sailing from Port Everglades. Port calls include San Juan, Tortola and St. Maarten.

Celebrity is curating unique speciality programming, including evening gallery exhibitions and art auctions featuring female artists, celebrating the female form; collaborating on an exclusive design with luxury jewellery designer Reout Kallati; hosting special events, such as a cinema series featuring iconic and impactful female directors, leads and inspirational narratives; and other dedicated onboard programming, including Women of the World-themed trivia challenges, Fearless Female Officers vs. Guests Pool Volleyball tournament, and a Q&A panel with the ship’s inspiring female leadership team.

Additional speciality programming is still to be announced, including a moderated discussion panel with current confirmed special guests including artist and child prodigy Autumn de Forest and fashion designer Mary Frances; unique networking opportunities and more, all with the goal of inspiring a new generation of young girls and women to continue pushing boundaries and breaking barriers, according to a company statement.

Image result for celebrity captain kate mccue"
Captain Kate McCue

“We are all passionate about closing the gender gap,” said Celebrity Cruises President and CEO Lisa Lutoff-Perlo. “Over the last few years, we have worked hard to diversify the crew on board and bring more women than ever into our industry. None of this could have been possible without the leadership and shared the vision of the extraordinary men and women I work with every day, led by Patrik Dahlgren and Brian Abel – who take this challenge to heart and have made it possible. We are fortunate to have many incredible, experienced and beyond-qualified women who have worked tirelessly to achieve these positions. And we also celebrate the many men who continue to support them and help champion having more women crew on board.”

Senior Vice President of Global Marine Operations for Royal Caribbean Cruises Patrik Dahlgren, who has spearheaded Celebrity’s bridge diversification efforts under the leadership of Lutoff-Perlo, added: “Since 2015, we have raised the percentage of qualified women on our navigational bridges from 3% to 22%. Now, we hope this all-time industry-high will continue to grow; we just need more women to raise their hands for careers at sea, especially in engineering.”

“Excitement does not even begin to describe how I’m feeling about working alongside these incredible, barrier-breaking women on Celebrity Edge for this truly historic sailing,” added Captain McCue. “I am inspired every day by the amazing women we have working throughout this organization – both on land and at sea. They’re proof that there’s power in diversity.”

Among the officers are Captain McCue, First Officer Rachel Arnold and Second Officer Nicholine Tifuh Azirh.

Celebrity Edge March 8, 2020, Sailing Leadership Team

• Captain Kate McCue – USA
• Staff Captain Maria Gotor – Spain
• Hotel Director Niina Hautaniemi – Finland
• Guest Relations Director Julie Sherrington – United Kingdom
• F&B Director Byliana Velikova – Bulgaria
• Senior Doctor Jennifer Bernardo – Philippines
• Cruise Director Sue Denning – United Kingdom
• Safety Officer Ionela Burduja – Romania
• Associate Hotel Director Milana Dortangs – Netherlands
• Revenue and Marketing Director Sarah Guinot – France
• HR Manager Angel George – USA
• Financial Controller Teresa de Guzman – Philippines
• Chief Housekeeper Lyudmyla Miroshnychenko – Ukraine
• Safety Investigation Officer Alexandra Villarreal – USA
• Environmental Officer Maria Karoutsou – Greece
• Chief Security Officer Mor Segev – Israel
• Chief Officer Maria Koliou – Greece
• Chief Officer Maria Agius – Malta
• Doctor Sumaya Guffar – South Africa
• First Officer Rachel Arnold – United Kingdom
• First Officer Despoina Tsairi – Greece
• Third Engineer Anna Avgoustaki – Greece
• Second Officer Nicholine Tifuh Azirh, who was the first West African woman to ever work on the bridge of a cruise ship when hired in 2017 – Cameroon
• Second Officer Ioana Tzovara – Greece
• Third Officer Esperanza Romero – Spain
• Third Officer Cassandra May Mead – New Zealand
• Apprentice Officer Gifty Adu Gyami – Ghana

Carnival and Royal Caribbean join forces to develop St Lucia cruise facilities

Image result for St Lucia cruise terminal

Carnival Corporation and Royal Caribbean Cruises have signed an agreement to construct a new cruise terminal on the island and manage its existing facility.

The cruise giants signed a memorandum of understanding with the Saint Lucian government on Tuesday to form a joint venture for the project.

The cruise line brands account for 75% of all cruise ship deployment to the island.

The joint venture will manage and operate the current cruise pier and terminal facilities at the Port of Castries and design, finance, build and operate a new cruise port in Vieux Fort on the southern part of the island.

Prime minister of Saint Lucia Allen Chastanet said the agreement marked “a major step towards enhancing” the country’s tourism offering.

He said: “Saint Lucia has had record-breaking cruise arrivals over the past few years and we thank our partners Carnival Corporation and Royal Caribbean for their continued confidence in our amazing destination.

“It is essential that we continue to diversify what we have to offer, grow our brand and ensure that different sectors in our island’s economy benefit from the growth in cruise tourism and that Saint Lucians can benefit from the opportunities which arise from the increased numbers; which means we have to improve our capacity.

“This signing is historic, as this project will have a major impact on the sustainability of the cruise sector and the reach of cruise tourism to the south of the island. This will also mean employment at several phases of the project, the expansion of existing businesses and the formation of new enterprises.”

Giora Israel, senior vice president of global port and destination development for Carnival Corporation said: “This is an exciting day for our guests who already love the beauty and deep culture of Saint Lucia and an important step in sustaining cruise tourism growth for the island.”

Michael Bayley, president and chief executive of Royal Caribbean International said the cruise market is the fastest-growing sector of tourism and in the next decade cruising in the Caribbean is anticipated to grow by 40%.