As ships lay idle and companies funnel money into keeping them operational, cruise lines are looking for ways that they can possibly cut down on how much money they’re spending. Not only are these companies not receiving a fraction of the revenue they were pre-coronavirus, but the actual cost of merely existing has continued to be quite high. Laid-up ships are expensive to maintain and it takes a good amount of money to pay employees. There aren’t any easy answers for cruise lines right now.
Charter air plan
As of May 2020, the luxury line Lindblad Expeditions says that they have enough cash to remain out of operations for the rest of 2020 and into 2021. This is a result of them managing their funds quite wisely, and it seems they have a number of creative plans to continue doing so. One of their ideas for resuming some expeditions later this year is creating a charter air plan, which they already are looking at partners for. This will allow them to have safer flights specifically for their customers, cutting down on the possibility of an outbreak and increasing the confidence of their travelers. It also lets them not be economically reliant on airlines, which are in much the same situation as cruise lines right now. According to the company, their bookings for the end of 2020 are solid, as are the bookings for 2021, so they likely won’t have to use the reserve funds they have stashed away, but it’s always nice to have some emergency money.
Norwegian is in a bit of worse spot than Lindblad. They are expecting a net loss for the year and are intent on findings way to both increase capital and cut down on costs. One of their strategies is targeting the lay-up of their ships. They’ve taken a number of steps to reduce how much they’re spending on maintenance of their fleet, including “food, fuel, insurance, port charges and reduced crew manning of vessels during suspension, resulting in lower crew payroll expense.” This essentially means that their ships are now in cold lay-up and will take longer to jump back into action, but this is a plan that ultimately works better for now, as its unlikely that any sudden changes will allow cruises to start business up again soon.
When all else fails, there’s a surefire way to cut down on costs and avoid a situation that would endanger the company. Furloughing employees is an alarming reality for many places right now, and the cruise industry is not immune to having to do this. Norwegian unfortunately announced that they would furlough 20% of their employees until the end of July. Hopefully this can help the company avoid a financial situation where even more employees would have to be let go.
There are plenty of ways to save money during this pandemic, but not all of them are pretty. Here’s hoping that cruise lines will continue to be creative and find solutions that work best for everyone involved!