Royal Caribbean Gains After Disclosing Strong Cash Position

Shares of Royal Caribbean gain after the company reveals it has $2.45 billion in cash, even as it projects a monthly burn rate of as much as $275 million.
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Shares of Royal Caribbean Cruises  (RCL) - Get Report picked up steam Friday after the company revealed that it has $2.45 billion in cash and cash equivalents, alleviating concerns that it may be burning through cash too quickly.

The cruise operator said in a statement that as of April 30 it had cash of approximately $2.3 billion. it also noted that on May 4 it increased its 364-day senior secured credit facility and drew $150 million.

As of March 31, the company had $2.4 billion in customer deposits.

"These are unprecedented times for all of us. Travel restrictions and stay-at-home orders are important to slowing the spread of the virus, but they have severely impacted our operations," Royal Caribbean CEO Richard Fain said in the statement.

"We are taking decisive actions to prioritize the safety of our guests and crew while protecting our fleet and bolstering liquidity."

Royal Caribbean suspended all its cruise operations March 13 and decided to remain on hold through at least June 11. “Continued disruptions to travel and port operations in various regions may result in further suspensions,” the company said.

The Miami-based company predicted its monthly cash burn will total $250 million to $275 million while its cruise ships remain docked. It has debt maturities of $400 million this year and $900 million next year.

"Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020," the company stated.

Royal Caribbean shares recently traded at $39.12 up 2.86% and have plunged 65% over the past three months.