Skip to main content

Royal Caribbean Posts Big Loss as Pandemic Pummels Cruise Operator

Royal Caribbean Cruises posts a massive quarterly loss as the embattled cruise operator continues to navigate the global coronavirus pandemic.

Royal Caribbean Cruises  (RCL)  posted a wider-than-expected quarterly loss on Wednesday as the embattled cruise operator succumbed to the coronavirus pandemic that not only decimated the tourism industry but also directly infected its ships.

The Miami-based company posted an adjusted loss of $310.4 million, or $1.48 a share, vs. earnings of $275.8 million, or $1.31 a share, in the comparable year-earlier quarter. Analysts polled by FactSet had been expecting a loss of 31 cents a share.

Revenue came in at $2.03 billion, below last year’s $2.4 billion and also below analysts’ forecasts of $2.1 billion.

Royal Caribbean was among the first cruise operators to feel the effects of the coronavirus pandemic, which was already impacting the cruise industry in early February when it began canceling cruises out of China

As the pandemic hit Europe and then North America, Royal Caribbean along with the rest of the cruise industry was forced to not only dock its fleet but also work with authorities to both rescue and treat a series of Covid-19 outbreaks on its ships.

The company suspended its entire global operations on March 13, "which resulted in the cancellation of 130 sailings during the first quarter and a consequent reduction in the capacity of approximately 20% vs. guidance and 17% vs. the same time last year," it said.

To shore up its cash position, Royal Caribbean said this week it is launching a $3.3 billion bond offering using 28 of its ships as collateral. The company will use the proceeds to repay its $2.35 billion, 364-day term loan agreement with Morgan Stanley.

It also estimated its cash burn to average in a range of approximately $250 million to $275 million a month. As of April 30, Royal Caribbean said it had liquidity of about $2.3 billion all in the form of cash and cash equivalents.

A silver lining for Royal Caribbean: The company noted that 2021 bookings remained "within historical ranges."

Shares of Royal Caribbean were up 0.47% at $42.17 in trading on Wednesday.