Cruise stocks drop amid Covid concerns, Florida court ruling

Cruise Stocks stumbled on Monday amid a wider market rout after an appeals court issued a ruling that will temporarily keep pandemic restrictions on the industry in place.

The U.S. Court of Appeals for the 11th Circuit on Saturday overturned a decision that sided with a Florida lawsuit challenging the Centers for Disease Control and Prevention’s ability to impose restrictions on the industry.

The 2-1 decision came hours before the lower court ruling went into effect and amid the spread of the delta variant of Covid. The number of new cases in the United States is increasing, especially in states with low vaccination rates.

Shares of Carnival Cruises fell more than 5%, Royal Caribbean more than 4% and Norwegian Cruise Line fell more than 5% by mid-afternoon. The S&P 500 Index was down about 2% by mid-afternoon.

Airline and hotel inventories have also fallen despite the recent surge in travel demand, as the market reacts to the spread of the Covid delta variant, now the dominant strain in the United States.

Last month, a federal judge sided with Florida, ruling that the CDC did not have the power to prevent the resumption of cruises or to regulate cruises inside, outside or outside. inside the state. Florida Attorney General Ashley Moody, a Republican, filed a lawsuit in April seeking to lift restrictions on the cruise industry that have been in place since March 2020.

Shares of all three cruise lines have fallen in recent weeks, despite gains earlier this year as cruises began to resume trading.

Carnival Cruises shares are down more than 37% from the stock’s 52-week high of $ 31.52, which it hit on June 8. The stock is down more than 9% year-to-date, bringing its market capitalization to over $ 23 billion.

Royal Caribbean stock has fallen more than 30% from its 52-week high of $ 99.24 reached on February 25. The stock has fallen more than 7% this year, bringing the cruise line’s market cap to nearly $ 18 billion.

Norwegian Cruise Line stock has fallen almost 37% from its 52-week high of $ 34.48 reached on March 4. The stock has fallen more than 14% this year, bringing its market capitalization to over $ 8 billion.

At the height of the pandemic, there were several high-profile outbreaks aboard cruise ships, prompting the CDC to impose strict guidelines on the industry. The cruise industry has been one of the last sectors to return to pre-pandemic operations, as the CDC recently allowed cruises to resume sailing, with strict health protocols.

Canada announced on Friday that it would allow the resumption of cruises in early November, pushing back its original date from February 2022.

Norwegian Cruise Line last week sued the Florida Surgeon General to end the state’s vaccine passport ban, which prevents companies from requiring customers to show proof of vaccination. In its complaint, the cruise line said the ban harms its ability to enforce CDC guidelines and prevent the virus from spreading aboard its ship and could force it to cancel upcoming cruises.

Norwegian’s first departure from the United States is scheduled for August 7, and its first departure from Florida is scheduled for August 15.

Royal Caribbean and Carnival Cruises have resumed departures from U.S. ports, even allowing unvaccinated passengers to board ships from Florida, but unvaccinated passengers are required to purchase travel insurance to cover costs related to Covid.