Carnival expects 2021 loss but says 2022 bookings are strong

Carnival expects 2021 loss but says 2022 bookings are strong

Wednesday, January 13, 2021

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C arnival Corpora tion said Monday its 2022 cruise bookings are running ahead of 2019 numbers, a good sign that guests will return once the pandemic has eased.

The coronavirus has been devastating for the cruise industry, which had expected to welcome 30 million passengers worldwide in 2020. Instead, Carnival and others halted sailings in March 2020 after numerous ships reported outbreaks on board.

Carnival resumed a limited amount of cruising in Italy in September and Germany in October, with lower passenger capacity and other safety restrictions. But operations were suspended in late October as coronavirus cases spiked across Europe.

Carnival's Costa brand, which operates in Italy, is scheduled to restart operations on January 31. Aida Cruises, the company's German brand, has extended its pause through the end of February.

Miami-based Carnival said it is working on resuming cruises in Asia, Australia and the US over the course of this year. Carnival Cruise Line, the company's biggest brand, has cancelled all US sailings through March 31.

The company is confident customers will return as it slowly ramps up business. As of December 20, bookings for the second half of 2021 were within historical ranges despite minimal advertising and marketing, Carnival said.

But limiting capacity on ships and adding new safety measures will cut into profits. The company said it expects to report a net loss its 2021 fiscal year, which ends in November.

In a preliminary earnings report issued Monday, Carnival said it lost US$2.2 billion in its fourth quarter, which ended November 30. Adjusted for one-time costs, including the sale of ships, Carnival lost US$1.9 billion. That compares to earnings of US$427 million in the same period the year before.

Carnival is funding operations with a mix of loans, equity offerings and other financial transactions. The company said it ended its 2020 fiscal year with $9.5 billion in cash.

To raise cash and bring its fleet in line with anticipated demand, Carnival has accelerated the removal of less efficient ships. The company said it sold or recycled 15 ships in its 2020 fiscal year and expects to sell or scrap four more in the coming months. Prior to the coronavirus outbreak, the company had planned to dispose of those ships after several years.

Carnival is also adding fewer ships than planned to its fleet. The company recently took delivery of two new ships and expects to receive one more in 2021. Five ships were originally scheduled for delivery in 2021.

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