Carnival's Second-Quarter Revenue Dives as It Preps to Sell Off Ships

Carnival reveals a massive second-quarter loss and steps to sell off a half-dozen cruise ships in an effort to keep itself buoyed amid the coronavirus pandemic.

Carnival (CCL) - Get Report on Thursday announced a massive second-quarter loss and steps to begin selling off a half-dozen of its older cruise ships in an effort to keep itself afloat as its operations remain stalled and padlocked amid the ongoing coronavirus pandemic.

The Miami-based company posted an adjusted loss of $2.4 billion, or $3.30 a share, vs. earnings of $457 million, or 66 cents a share, in the comparable year-earlier quarter. Analysts polled by FactSet had been looking for a loss of $1.52 a share.

Including $2 billion in charges over the three-month period, the company posted a non-GAAP loss of $4.4 billion, or $6.07 a share. Revenue came in at $700 million, down more than fivefold from the $4.8 billion it brought in a year earlier.

The results followed by a day rival Norwegian Cruise Line's  (NCLH) - Get Report announcement that it was keeping its cruise ships docked through at least the end of September amid ongoing concerns over the coronavirus and its potential to incubate on cruise ships.

Cruise lines in particular have been battered by the coronavirus pandemic, which stopped all but essential travel outright for close to two months and has generated massive headwinds for the travel and tourism industry, particularly cruises. 

“The longer the pause in guest operations continues the greater the impact on the company's liquidity and financial position,” Carnival said in its earnings statement, adding that it expects to post a loss on both a U.S. GAAP and adjusted basis for the second half of 2020.

To be sure, the company revealed the depths of its efforts to keep itself financially solvent while waiting out the pandemic, including plans to generate more cash by selling off some of its older ships. 

The company said it has secured preliminary agreements for the disposal of the six ships, which are expected to leave the fleet in the next 90 days, and was currently working toward additional agreements. 

Carnival ended the second quarter with $7.6 billion in available liquidity. The company has $8.8 billion of committed credit facilities available to fund ship deliveries originally planned through 2023.

Total customer deposits balance as of the end of May were $2.9 billion, including $475 million related to cruises during the second half of 2020. As of May 31, customer deposits totaled $2.6 billion, with $121 million relating to third-quarter sailings and $353 million relating to fourth-quarter sailings, Carnival said.

Carnival also said it expects any declines in customer deposits in the second half of 2020 "to be significantly less than the decline in the second quarter of 2020," with all deposit refunds expected to occur in the third quarter

Shares of Carnival were down 1.73% to $18.76 in trading on Thursday.