Royal Caribbean Group today commented on the business considering the global COVID-19 pandemic and reported financial results for the first quarter of 2021.
“We are looking forward to resuming operations out of various ports around the world in the coming months. In addition, we have had very constructive dialogues with the Centers for Disease Control and Prevention (CDC) in recent weeks about resuming cruising in the U.S. in a safe and healthy manner,” said Richard D. Fain, Chairman and CEO.
“Last night, the CDC notified us of some clarifications and amplifications of their Conditional Sail Order which addressed uncertainties and concerns we had raised. They have dealt with many of these items in a constructive manner that takes into account recent advances in vaccines and medical science. Although this is only part of a very complex process, it encourages us that we now see a pathway to a healthy and achievable return to service, hopefully in time for an Alaskan season.”
Since the last business update, the company said it has announced new itineraries for this summer for eleven additional ships from the Caribbean and Europe in addition to the four ships already sailing. The initial reaction to these announcements has been positive, highlighting the strong demand for cruising.
Royal Caribbean reported US GAAP Net Loss for the first quarter of 2021 of $(1.1) billion or $(4.66) per share compared to US GAAP Net Loss of $(1.4) billion or $(6.91) per share in the prior year. The company also reported Adjusted Net Loss of $(1.1) billion or $(4.44) per share for the first quarter of 2021 compared to Adjusted Net Loss of $(310.4) million or $(1.48) per share in the prior year. The Net Loss and Adjusted Net Loss for the quarter are the result of the impact of the COVID-19 pandemic on the business.
The average monthly cash burn rate for the first quarter of 2021 was approximately $300 million. This is slightly higher than the previously announced range driven mainly by fleetwide restart expenses and timing.
Since the suspension of operations in March 2020, the company has raised approximately $12.3 billion through a combination of bond issuances, common stock offerings and other loan facilities. Given the current environment, the company continues to bolster its liquidity.
As of March 31, 2021, the company had liquidity of approximately $5.8 billion, including $5.1 billion in cash and cash equivalents and a $0.7 billion commitment for a 364-day facility.
As Royal Caribbean transitions back to operations, it said it expects to incur incremental spend related to bringing ships back to operating status, returning crew members to ships and implementing enhanced health and safety protocols.
“The decision to return each vessel takes into account many variables, including deployment opportunities, commercial potential, cost of operations and cash flow,” the company said. “Given the fluidity of return to service decisions and costs related to the ramp-up, the company cannot reasonably estimate a monthly average cash burn rate related to such ramp-up. Monthly average cash burn rate for ships that are in lay-up status is expected to remain consistent with previous expectations.”
“We are prepared and eager for the flywheel to start turning again,” said Jason T. Liberty, executive vice president and CFO. “Moreover, we are optimistic that with the gradual resumption of cruise operations, our cash flow from operations will sequentially improve, driven by an increase in the inflow of customer deposits. We feel optimistic about our future and are thrilled to see more and more guests around the globe enjoying incredible vacations onboard our ships.”
Update on Bookings
Booking activity for the second half of 2021 is aligned with the company’s anticipated resumption of cruising. Pricing on these bookings is higher than 2019 both including and excluding the dilutive impact of future cruise credits (FCCs), according to a press release
Cumulative advance bookings for the first half of 2022 are within historical ranges and at higher prices when compared to 2019. This was achieved with minimal sales and marketing spend which the company believes highlights a strong long-term demand for cruising.
Since the last business update, approximately 75% of bookings made for 2021 are new and 25% are due to the redemption of FCCs and the “Lift & Shift” program. The company continues to provide guests on suspended sailings with the option to request a refund, to receive an FCC, or to “lift & shift” their booking to the following year.
