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What happened
Friday was a tough day for cruise industry investors, and the first day after the holidays – Tuesday – doesn’t look much nicer, at least not in financial news. Investment bank Berenberg lowered the shares of cruise lines in the sector on Friday, slashing Carnival (NYSE: CCL) (NYSE: CUK) and Royal Caribbean (NYSE: RCL) from suspension to sale and demotion Norwegian Cruise Line Holdings (NYSE: NCLH) from purchase to conservation.
Today, the news is arguably even worse, with the latter company – Norwegian Cruise Line – announcing that it will extend its own suspension from global navigation until the end of May 2021. And yet … the action of Carnival Corporation rose 6.6%. 11:11 a.m. EST, while rivals Royal Caribbean and Norwegian Cruise Line gained 6% and 5.2% respectively.
What is it about?
Image source: Getty Images.
So what
According to analysts at Berenberg (via reports on TheFly.com), Wall Street has “no idea” when the cruise will resume at one of the major cruise lines, at least not with enough passengers on board to. have a significant effect on income. For his part, Berenberg sees nothing like a return to normalcy occurring before 2024 or even 2025.
Meanwhile, debt levels are “skyrocketing” across the industry, and assuming banks want to receive interest on that debt, the entire cruise industry business model looks increasingly “Not viable”.
Then, just to bring that point home, Norwegian confirmed that previous hopes of a return to cruising this summer seem increasingly unrealistic.
Now what
And yet, on a cruise will resume one day – and probably sooner than Berenberg predicted.
More vaccinations will help move this date forward. Last month, if you remember correctly, the small Saga cruise operator in the UK announced that it would require proof of coronavirus vaccination for anyone wishing to board its cruise ships. American Queen Steamboat Company and Victory Cruise Lines in the United States followed suit this month.
Norway’s largest operator had previously said it was considering a similar move, and on Friday night – after negotiations closed last week, but before it can resume this week – Royal Caribbean has confirmed it will require all of its members to crew are vaccinated once the cruise resumes.
“Several vaccines have been shown to be effective in preventing mild and severe symptoms of COVID-19,” Royal Caribbean said in a letter to its employees, “and we intend to make this a key part of our return to service. healthy.”
While healthcare workers have already administered 52 million vaccines in the United States in the past two months and the vaccination rate accelerates day by day, a “return to normal” by 2024 or more 2025 seems unduly pessimistic to me. We might not see the cruise resume in time for the summer, okay. But I see a return to cruising before 2022 as more likely than not.
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