Carnival Corporation has just released an update on their financial standings for the third quarter of 2020. On top of that, they also announced that they will be removing several ships from the Carnival Corporation fleet. There’s a lot to dig into with this news, so let’s jump right into it.
Third quarter financials
As with most other cruise companies on the planet right now, Carnival Corporation isn’t doing as well as they would have hoped. The most important figure from their third quarter report is their net loss, which clocks in at $2.9 billion. With that being said, their cash burn has thus far been in line with their estimated numbers. They were expecting a monthly cash burn of $770 million for their third quarter, which turned out to be accurate. Their fourth quarter is expected to have a cash burn of $530 million, but this could change if cruising is allowed again at any point during the quarter.
Removing ships
Along with releasing their third quarter financials, Carnival also made it clear that their fleet will be changing drastically in the coming months. According to them, 18 of their “less efficient ships” will be removed from the fleet. This is an increase from the original number of ships that were set to leave, which was 13. In an SEC filing, the company noted that this “will result in future operating expense efficiencies of approximately two percent per available lower berth day (“ALBD”) and a reduction in fuel consumption of approximately one percent per ALBD.”
The future for Carnival
All of this clearly looks like bad news. Despite this, Carnival doesn’t seem too worried. As previously noted, their net loss and cash burn were expected and accounted for. According to the company, they have about $8 billion that they can use “to opportunistically further improve [their] liquidity profile.” Additionally, bookings for the second half of 2021 are surprisingly high. Finally, the company has two cruise lines that are currently preparing to resume operations. Costa began sailing again on September 6th, and AIDA is set to sail again this fall. This will be a huge boon for them financially.
While the third quarter report from Carnival seems to spell disaster, the company seems to be in an alright place. No company wants to lose almost $3 billion in a quarter, but they still have some room to work with. Additional fundraising efforts will hopefully prove fruitful in the interim between now and when more of their cruise lines can begin sailing again.
