Royal Caribbean is working toward meeting the CDC’s conditions for the resumption of cruising, but ‘many uncertainties remain as to the specifics, timing, and cost of implementing its requirements.’ Here, a Royal Caribbean ship is moored in the port of Miami.
Daniel Slim/AFP via Getty Images
Hit hard by the pandemic, Royal Caribbean Group lost $1.1 billion, or $5.02 a share, in the fourth quarter on an adjusted basis versus a profit of $1.42 a share year earlier as revenue plunged to $34.1 million from $2.5 billion.
Royal Caribbean (ticker: RCL), like its peers, has suspended most of its operations for nearly a year due to Covid. With most of its fleet idle, the company has been burning through hundreds of millions of cash every month.
In a press release Monday, the Miami-based company estimated its monthly cash burn to be $250 million to $290 million “during a prolonged suspension of operations.”
As of Dec. 31, the company’s liquidity totaled about $4.4 billion. Last year, to shore up its liquidity, Royal Caribbean raised about $9.3 of new capital, including debt and equity.
Royal Caribbean didn’t provide financial guidance for the year, other than that it expects to have losses on a generally accepted accounting principles and adjusted basis for the first quarter and full year of 2021. CFO Jason Liberty told analysts during the company’s fourth-quarter earnings call Monday morning that “the timing and trajectory of the recovery remains uncertain.”
In midmorning stock-market trading, Royal Caribbean shares were up 10%, around $86.60.
Speaking to analysts, CEO Richard Fain said at lot has occurred since a Covid protocol panel sponsored by Royal Caribbean and Norwegian Cruise Line Holdings (NCLH) released its recommendations last fall. Since then Covid vaccines have begun to roll out.
“We continue to work with the panel” and “to identify the safest pathway forward in the new post-vaccine environment when we can protect our guests and crew as never before,” Fain said, adding that the company has successfully resumed some cruises out of Singapore.
A key question is when Royal Caribbean will be able to resume its operations in and out of U.S. ports. The Centers for Disease Control and Prevention issued a conditional sail order in late October, but the timing remains uncertain.
The company said it “continues to prepare and develop its plan to meet the framework” of that order.
“While the framework represents an important step to return to service, many uncertainties remain as to the specifics, timing, and cost of implementing its requirements,” the statement said.
Royal said it expects to resume its global cruise operation “in a phased manner with the initial cruises having reduced guest occupancy, modified itineraries and enhanced health and safety protocols.”
The cruise operators suffered a setback recently when the Canadian government extended its ban on large cruise ships for another year. That’s likely to have an impact on Alaska cruises, which are popular in the summer.
Royal Caribbean said in its press release Monday that bookings for the second half of this year are “aligned with the Company’s anticipated resumption of cruising.”
On a GAAP basis, Royal Caribbean lost $6.09 a share in the fourth quarter, compared with a profit of $1.30 a share a year earlier.
For all of 2020, the company lost $27.05 a share on a GAAP basis and $18.31 on an adjusted basis, reflecting the huge impact of the shutting down operations due to the pandemic.
In 2019, before the pandemic hit, the company earned $8.95 on a GAAP basis and $9.54 on an adjusted basis.
Write to Lawrence C. Strauss at [email protected]
