Carnival Corporation confident over long-term cruise demand

Booking trends for 2021 indicate long-term potential demand for cruising despite sailings having been cancelled since the start of the coronavirus pandemic in mid-March.
The glimmer of hope for the struggling sector came from Carnival Corporation despite reporting an average monthly cash burn of between $550 million and $770 million as dozens of ships remain idle, including some off the south coast of Britain.
The world’s largest cruise group has started a phased return to operations with Italian brand Costa and German line Aida.
Other brands and ships are expected to return to service “overtime”.
The initial cruises will continue to operate with adjusted passenger capacity and enhanced health protocols developed with government and health authorities, and guidance from medical and scientific experts.
“Many of the company’s brands source the majority of their guests from the geographical region in which they operate. In the current environment, the company believes this will benefit it in resuming guest cruise operations,” the company said.
But in a business update on Thursday, the corporation said: “Currently, the company is unable to predict when the entire fleet will return to normal operations, and as a result, unable to provide an earnings forecast.
“The pause in guest operations continues to have a material negative impact on all aspects of the company’s business, including the company’s liquidity, financial position and results of operations.”
The company expects to report an unspecified loss for the financial year ending November 30 but has a total of $8.2 billion of cash and “cash equivalents”.
Bookings in the first half of 2021 reflect expectations of phased resumption operations and anticipated itinerary changes.
However, cumulative advance bookings for the second half of 2021 capacity currently available for sale are at the “higher-end” of the historical range.
“The company believes this demonstrates the long-term potential demand for cruising,” the parent of UK brands P&O Cruises and Cunard said.
Pricing on these bookings are lower by “mid-single digits” versus the second half of 2019, reflecting the effect of future cruise credits (FCCs) from previously cancelled cruises being applied.
The company continues to take bookings for both 2021 and 2022.
About 45% of passengers affected by schedule changes have received enhanced FCCs while 55% have requested refunds.
The total customer deposits balance at the end of August was $2.4 billion, the majority of which were FCCs, compared to $2.9 billion at May 31.
“The decline in customer deposits is consistent with previous expectations,” Carnival added.
Cruise capacity
More than half (60%) of bookings taken during the three weeks ended September 20 were new bookings as opposed to FCC re-bookings, despite minimal advertising or marketing.
Future capacity is expected to be “moderated” by the phased re-entry of ships, the removal of older capacity and delays in new ship deliveries.
The company has accelerated the trimming of capacity since the pause in operations with the disposal of 18 ships, ten of which have already left the fleet.
The 18 less efficient ships represent 12% of pre-pause capacity and only 3% of last year’s operating income.
The corporation expects to receive only two of the four ships originally due for delivery this year, including Enchanted Princess which was handed over last week.
The company expects only five of the nine ships originally set for delivery by the end of 2021 to be received by then.
Nine cruise ships and two smaller expedition vessels of the 13 originally scheduled for delivery before the end of the 2022 financial year are expected to be delivered by then.
“Based on the actions taken to date and the scheduled new-build deliveries through 2022, the company’s fleet will be more efficient with a roughly 13% larger average berth size per ship and an average age of 12 years in 2022 versus 13 years, in each case as compared to 2019,” Carnival said.
President and chief executive Arnold Donald said: “We have come full circle from initiating a suspension in the early days of the pandemic, to transitioning the fleet into a pause status, right-sizing our organisation and, now, embarking on the phased resumption of guest operations, underway in two of our world-leading cruise brands, Costa in Italy and Aida in Germany.
“We have accelerated the sale of less efficient ships, enabling us to capitalise on pent up demand on reduced capacity and structurally lower our cost base, while retaining our most cash-generating assets.
“We are taking aggressive actions managing the balance sheet and reducing capacity to position us to weather this disruption and also emerge a leaner, more efficient company, reinforcing our industry-leading position.”

Government commits to testing ‘to open up international travel’

The launch of a Global Travel Taskforce ‘to open up international travel and boost our business’ has been confirmed.
It will consider how a testing regime for international arrivals could be implemented to boost safe travel to and from the UK, what steps can be taken to facilitate business and leisure travel through testing and non-testing means and how to increase consumer confidence to support the recovery of international travel.

The current rules around the 14-day self-isolation policy remain in place.
The task force was launched in collaboration between the Department for Transport and the Department of Health and Social Care which said they have been working with clinicians, health experts and the private testing sector on the practicalities of testing international arrivals.

They said the next step is to develop an “operationalised approach” to “work at pace with industry on implementation” of testing and to “identify options to reduce the self-isolation period while protecting public health”.
The task force will look at the feasibility of a single test taken after a period of self-isolation, provided by the private sector and at the cost of the passenger.

It will work with medical experts to better understand when a test should be taken based on the progression of the disease and with the private sector to ensure testing for international arrivals does not impact on NHS capacity.

Alternative testing models, including pilots with partner countries to determine whether self-isolation could be undertaken pre-departure, will also be explored.
The taskforce will be jointly chaired by the secretary of state for health, Matt Hancock, and transport secretary Grant Shapps, who first made the announcement via Twitter after a series of newspapers carried the story on Wednesday morning.

In the official announcement, Shapps said: “The current measures at the border have saved lives. Our understanding of the science now means we can intensify efforts to develop options for a testing regime and help reinvigorate our world-leading travel sector.
“This new task force will not only help us move towards safer, smoother international travel as we continue to battle this virus but will also support global connectivity – helping facilitate more covid secure travel whilst protecting the population from imported cases.”
On Twitter, he said: “Following agreement from medical experts, we are moving ahead with the next step to reduce the travel quarantine period by launching the Global Travel Taskforce to open up international travel & boost our businesses.
“The task force will implement a testing regime to reduce the self-isolation period, along with a wide range of other measures to enable travel whilst keeping coronavirus rates down.”

Hancock added: “It is vital we do everything we can to control the spread of the virus and our measures at the borders are designed to help keep the country safe, by preventing imported cases of Covid-19.
“We know how these measures have a significant impact on people’s lives and on the travel and tourism industries, so we are working hard across government to explore ways to open up international travel in a safe way.”
As previously reported, the task force is expected to put forward its initial recommendations next month.

BVI Reopens to Visitors on Dec. 1

The British Virgin Islands has announced its borders will be opened to visitors on December 1, according to Premier and Minister of Finance, Honourable Andrew A. Fahie.

He said that the government is optimistic and is vigorously preparing for the re-opening of the territory to welcome back tourists among others.

Premier Fahie said: “The territory has two full months to prepare and we as a people must get it right and we must get it done by all working together, both the Government and private sector.”

The Premier said that the government intends to reopen the territory in the safest way possible using science and technology as a guide.

“This next phase also comes with a risk factor, where if a case of COVID-19 gets into our Territory, then it can go through the whole community very quickly. That is why we must use technology,” he said. “The concentration must be to use the technology through a simulation prior, to demonstrate that the technology will complement the science to greatly assist us in re-opening in the safest way, humanly possible.

“Please note that we who are in the Virgin Islands must also play our part and play it well to ensure that we adhere to all approved social distancing measures. This will also reduce or eliminate any possible spread of the virus.”