Royal Caribbean Group today reported financial results for the second quarter of 2021 and provided business updates on the resumption of service.
“We’re thrilled to be back on the water at accelerated speed in the US and elsewhere. After 16 months of being at a virtual standstill and another painful financial result this quarter, the flywheel is clearly picking up momentum,” said Richard D. Fain, Chairman and CEO. “Since the pandemic began, our objective has been to make our ships safer than Main Street, and today, we are proving that ambitious goal is achievable. We are also encouraged by the booking outlook especially for 2022 and beyond.”
The company said it “made tremendous strides in resuming service both in the United States” and globally and is encouraged by the significant improvement in demand and pricing environments for cruises.
• Already, the Group is operating 29 ships across its five brands, representing 42% of capacity.
• By the end of this month, the Group expects to be operating 36 ships, representing over 60% of its capacity.
• The Company anticipates having 80% of its capacity in service by end of year 2021.
• Booked load factor for 2022 is within historical ranges. Prices for 2022 are up versus a record-setting 2019, even including the dilutive impact of future cruise credits (FCCs).
• Customer Deposits have increased $530 million from last quarter to $2.4 billion.
• The Company ended the second quarter with $5.0 billion of liquidity.
Since the last business update, the Company has announced itineraries for 21 ships sailing by August 31, 2021, which includes 12 ships sailing from U.S. ports. This is in addition to 15 ships previously announced sailing from ports outside the U.S. In total, 36 ships from the company’s five brands, or over 60% of its fleet, have either resumed sailing or announced their intention to resume sailing by August 31, 2021.
The company reported US GAAP Net Loss for the second quarter of 2021 of $(1.3) billion or $(5.29) per share compared to US GAAP Net Loss of $(1.6) billion or $(7.83) per share in the prior year.
The company also reported Adjusted Net Loss of $(1.3) billion or $(5.06) per share for the second quarter of 2021 compared to Adjusted Net Loss of $(1.3) billion or $(6.13) 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 second quarter of 2021 was approximately $330 million, slightly higher than the prior quarter as the company returned additional ships into operation.
“As we look forward, there is very positive momentum with our ships resuming operations and a healthy demand environment” said Jason T. Liberty, Executive Vice President and CFO. “We are very optimistic with our accelerated start in the United States and globally. We anticipate 80% of our fleet to be back in service by year-end delivering the world’s best vacations. That is the first step on our pathway back to delivering superior returns.”
Since the suspension of operations in March 2020, the company has raised approximately $13 billion through a combination of bond issuances, common stock offerings and other loan facilities. These actions have positioned the company well with current liquidity of approximately $5.0 billion, according to a press release.
Overall booking volumes have improved, and pricing remains strong. During the second quarter the company received about 50% more new bookings compared to the first quarter with trends improving from one month to the next. By June, the company was receiving about 90% more bookings each week when compared to the first quarter with improvements of a similar magnitude for both 2021 and 2022 sailings.
“The surge in bookings has been extremely encouraging especially for 2022 and beyond,” said Fain. “The return of cruising has been faster than anyone expected, and we are excited to gradually restart our presence in our key markets. We are watching the impact of the Delta variant and other likely variants, but overall, we remain optimistic in our mounting trajectory going forward. People also book their cruises long in advance, so we are concentrating on maintaining our price levels while growing our load factors.”
Overall, the booking activity for 2021 sailings is consistent with the company’s expected capacity and occupancy ramp up, at prices that are higher than 2019. While it’s too early to make any definitive conclusions of the impact of the Delta variant on bookings, the company said it has seen a modest impact on closer-in bookings.
However, 2022 continues to remain strong; in particular the spring and summer months are performing well.