Norwegian Cruise Line burned through $190 million per month in the latest quarter as it readies its fleet for a resumption of sailing. Here, a Norwegian ship is seen docked in the U.K. last year.
Luke MacGregor/Bloomberg
Norwegian Cruise Line Holdings had another quarter of big losses, the latest in a series of blows with its fleet idle for nearly a year due to the pandemic.
On an adjusted basis, Norwegian (ticker: NCLH) posted a fourth-quarter loss of $684 million, or $2.33 a share, down sharply from positive $156 million, or 73 cents a share, a year earlier. The FactSet consensus for an adjusted fourth-quarter loss of $2.17 a share.
Revenue plunged from $1.5 billion to $9.6 million “due to the complete suspension of voyages in the quarter,” the company said in a release Thursday.
The stock was at $29 and change, down about 5% in early trading Thursday. The S&P 500 was off about 0.5%.
Norwegian, based in Miami and the smallest of the big three U.S. cruise operators with 28 vessels in its fleet, announced on Feb. 16 that it had extended its suspension of voyages through May 31.
In the release, Norwegian CEO Frank Del Rio called 2020 “without a doubt the most challenging year in the Company’s 50 plus year history.” He added that the company was “encouraged by the accelerating rollout of vaccines, the progress towards herd immunity and the strong demand for future cruise vacations.”
But just when the company will resume sailings is uncertain. When it does so, it will be on a gradual, phased-in basis, Del Rio said.
The U.S. Centers for Disease Control and Prevention issued a conditional sail order last October. Norwegian along with Royal Caribbean Group (RCL) assembled a panel last year to come up with recommendations for cruise-related Covid protocols.
The company said it “continues to work with its expert advisors, the Healthy Sail Panel, and global public health authorities and government agencies to refine comprehensive and multi-layered health and safety strategy to enhance its already rigorous health and safety standards in response to COVID-19.”
Norwegian said that its average monthly cash burn during the fourth quarter was about $190 million, including $15 million per month of additional relaunch expenses “as [Norwegian] began preparing vessels for a potential return to service in early 2021.”
That, however, was before surge of Covid cases late last year and a wave of additional restrictions on travel.
The company expects is monthly cash burn to remain “temporarily elevated” at around $190 million in the first quarter.
Speaking to analysts Thursday morning, Del Rio said in part that “we view vaccine as a powerful tool, the most powerful tool, that when combined with various protective measures society is already accustomed to, such as face coverings and physical distancing, forms a multi-layered science-based approach to mitigate the risk of Covid 19 infections.”
He expects that when cruising resumes, vaccinations will be widely available in the developed world. “And we believe that by then, we will be able to secure vaccines for our crew, as we are well along today in the procurement process,” Del Rio said.
Investors are keeping close tabs on booking trends for Norwegian and its peers.
Norwegian said that its “overall cumulative booked position for the second half of 2021 remains below historical levels, driven by continued uncertainty around timing of the resumption of cruising and the shift of limited marketing investments to 2022 sailings.”
Second-half pricing, the release added, “is in line with pre-pandemic levels, even after including the dilutive impact of future cruise credits.”
“While still early in the booking cycle, 2022 booking trends are very positive driven by strong pent up demand,” according to the release.
Del Rio told analysts that booking volumes increased by more than 40% in January and February from November and December of last year.
During the fourth quarter, the company made several moves to strengthen its liquidity. Those included raising $824 million with an equity offering and another $850 million of senior unsecured notes that mature in 2026 with a coupon of 5.875%. It has raised about $6.5 billion since the onset off the pandemic, cut operating costs and reduced capital expenditures, among other steps.
As of Dec. 31, cash and cash equivalents totaled $3.3 billion.
Long-term debt was about $11.7 billion, up sharply from a little over $6 billion at the end of 2019.
One recent setback for the cruise operators was the announcement by the Canadian government that it was extending its ban on cruise ships sailing in Canadian waters for another year through February 2022. That would eliminate Alaska cruises, which are popular in the summer and profitable for the cruise companies.
Del Rio, however, said the Canadian suspension can be rescinded based on an improvement in public health and that he was “cautiously optimistic” that such a scenario will occur.
The cruise stocks have been prime examples of plays on a recovery. As of Wednesday’s close, Norwegian shares were up about 23% year to date, compared with about 4.5% for the S&P 500. But the stock was down about 20% over the past year.
For all of 2020, the company reported an adjusted net loss of $2.2 billion, or $15.75 a share. In 2019 net income totaled $1.1 billion or $5.09 a share.
Write to Lawrence C. Strauss at [email protected]
