Royal Caribbean says it sold its Azamara luxury brand in part to focus on its Celebrity Cruises brand, among others. Here, the Celebrity Silhouette is seen moored in Miami on a recent day.
Daniel Slim/AFP via Getty Images
Royal Caribbean Group is selling its three-ship Azamara brand to a private-equity firm for about $200 million.
In a press release Tuesday, Royal Caribbean Group (ticker: RCL) said the deal allows it to focus on expanding its Royal Caribbean International, Celebrity Cruises, and Silversea brands.
The stock was around $74 and change at around noon on Tuesday, up more than 1% on the day’s trading and ahead of the S&P 500’s gain of about 0.6%.
JPMorgan analyst Brandt Montour described Azamara in a research note Tuesday as “a higher-end brand focusing on more exotic/immersive itineraries.” He also observed that the transaction makes sense “given [that] the Azamara fleet is likely to burn cash for the foreseeable future, and we think RCL viewed this as a non-core brand with no serious plans to meaningfully grow it for the foreseeable future.”
Royal Caribbean will record a one-time non-cash impairment charge of $170 million, though it added that it doesn’t expect the sale “to have a material impact” on future financial results.
Royal Caribbean has been mostly shut down for nearly a year due to the pandemic.
As their ships sit idle, Royal and its peers have been burning through hundreds of millions of cash every month. They’ve raised billions of dollars in capital to tide them over, but they’ve also focused on cost cutting.
For example, Carnival (CCL), the largest cruise company, said last week that it is removing 19 ships from its fleet.
Of the big three U.S.-based cruise operators, Royal is the second largest, followed by Norwegian Cruise Line Holdings (NCLH).
Separately, Norwegian said Tuesday that it has extended its suspension all of its cruises with embarkation dates through April 30.
Write to Lawrence C. Strauss at [email protected]
