Carnival posts 2.2bn US dollar loss in Q4 2020

Carnival Corporation vows to emerge from the coronavirus pandemic a ‘leaner, more efficient company’ as it posts a net loss of $2.2bn for the final quarter of 2020.

Cumulative advanced bookings for the first half of 2022 are ahead of 2019 it said, despite minimal advertising or marketing. And it has accelerated the removal of 19 less efficient ships, 15 of which have already left the fleet.

President and Chief Executive Officer Arnold Donald said: "2020 has proven to be a true testament to the resilience of our company. We took aggressive actions to implement and optimise a complete pause in our guest cruise operations across all brands globally, and developed protocols to begin our staggered resumption, first in Italy for our Costa brand, then followed by Germany for our AIDA brand. We are now working diligently towards resuming operations in Asia, Australia, the UK and the US over the course of 2021."

"With the aggressive actions we have taken, managing the balance sheet and reducing capacity, we are well positioned to capitalise on pent up demand and to emerge a leaner, more efficient company, reinforcing our industry leading position." 

The cruise giant said that at December 20, 2020, cumulative advanced bookings for the second half of 2021 were ‘within the historical range’ and the additionally the cumulative advanced bookings for the first half of 2022 are ahead of 2019. It said due to the pause in guest cruise operations in 2020, the company’s future booking trends will be compared to 2019.

Carnival said the continued build in cumulative advanced bookings for this twelve month period ending May 2022 demonstrates the long-term demand for cruising, in particular with minimal advertising and marketing.

The cruise giant has offered enhanced future cruise credits (FCCs) – which increase the value of the guest’s original booking or provide incremental onboard credits – or cash refunds to guests booked on cancelled cruises. As of November 30, 2020, approximately 45% of guests affected by Carnival’s schedule changes had received enhanced FCCs and approximately 55% had requested refunds. 

The total customer deposits balance at November 30, 2020, was $2.2 billion, the majority of which are FCCs, compared to the total customer deposits balance of $2.4 billion at August 31, 2020. The decline in customer deposits is less than previous expectations.

As of November 30, 2020, the current portion of customer deposits was $1.9 billion with minimal bookings relating to first quarter of 2021 sailings. Approximately 60% of bookings taken during the quarter ended November 30, 2020 for the fiscal year 2021 were new bookings as opposed to FCCs re-bookings, despite minimal advertising or marketing.

Since the pause in sailings, Carnival has accelerated the removal of ships in 2020 which were previously expected to be sold over the ensuing years. The cruise line now expects to dispose of 19 ships, 15 of which have already left the fleet.

The company recently took delivery of two ships and expects only one more ship to be delivered in fiscal 2021 compared to five ships that were originally scheduled for delivery in fiscal 2021.

Chief Financial Officer David Bernstein said: "We ended the year with $9.5 billion in cash and have the liquidity in place to sustain ourselves throughout 2021, even in a zero-revenue environment. While we raised capital mainly through debt this year, in the last few months we opportunistically strengthened our capital structure by raising $2.5 billion through at-the-market equity offering programs and by the early conversion of $1.5 billion of convertible debt. As we return to full operations, our cash flow will be the primary driver to return to investment grade credit over time, creating greater shareholder value."

By Louise Longman, Contributing Editor (UK)