Royal Caribbean swings to $1.4B first-quarter coronavirus loss
Booking prices for 2021 are similar to last year's, cruise operator says
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Royal Caribbean Cruises Ltd. swung to a loss for the first three months of the year as its sailings remain suspended amid the Covid-19 pandemic, drying up its revenue stream.
The cruise operator, which said it also expects to post a loss for the second quarter and the full year, on Wednesday reported net loss of $1.44 billion, or $6.91 a share, compared with a profit of $249.7 million, or $1.19 a share, in the comparable quarter last year. The company said it booked a non-cash impairment loss of $1.1 billion.
Adjusted losses were $1.48 a share, wider than the loss of 34 cents a share analysts polled by FactSet had expected. It canceled 130 sailings during the quarter.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| RCL | ROYAL CARIBBEAN GROUP | 234.82 | +9.55 | +4.24% |
Revenue fell to $2.03 billion from $2.44 billion in the year-ago period. Analysts were looking for $2.06 billion. Cruise operating expenses rose to $1.51 billion from $1.41 billion.
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Bookings are significantly lower than the same time last year, with prices down low-single digits, the company said. Those for 2021 are still similar to last year's, with prices up mid-single digits compared with 2020, Royal Caribbean said.
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Royal Caribbean said about 45% of guests booked on canceled sailings have requested cash refunds as of April 30. Like other cruise lines, the company also offers future cruise credits at a premium as an alternative to cash refunds. As of March 31, the company said it had $2.4 billion in customer deposits, and that it continues to take future bookings through 2022.
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Its ships have transitioned into various levels of layup, including maintaining a skeleton crew on board for general maintenance when most of the ship's systems are shut down. Those recurring maintenance costs have led to its cash burn of about $250 million to $275 million a month, the company said.
The company said it had about $2.3 billion in cash and cash equivalents as of April 30. To boost its liquidity, the company said it has upped its financing by about $4 billion through a secured bond issuance and increased revolver capacity. On Tuesday, it closed $3.32 billion in debt offering secured by 28 vessels and intellectual property. Royal Caribbean is also planning to cut $3 billion from 2020 capital expenditures.
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As of Tuesday, Royal Caribbean said expected debt maturities for the remainder of 2020 and 2021 are $400 million and $900 million, respectively.
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The company said it expects interest expense for the remainder of the year to be between $590 million and $610 million.
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To cut costs, Royal Caribbean has laid off more than 5,000 U.S. shoreside employees, or about 26% of its workforce, frozen hiring and cut crew payroll, food, fuel, insurance and port charges. It has also eliminated or reduced marketing and selling expenses for the rest of the year.