It should come as no surprise that the coronavirus pandemic is acting as an extreme financial burden on the cruise industry. Cruise lines have been cancelling all sailings for the foreseeable future, the CDC has ordered all commercial itineraries to stop for quite some time, and the once booming travel industry is scrambling to find plans to mitigate losses. As nearly all ships sit stagnant at ports across the world, the costs are beginning to add up. This past week has offered some news, as well as some new estimates, as to how much this pandemic is going to cost. Let’s take a look.
While Port Canaveral has not suspended operations, the lack of consistent travel has definitely hurt their finances. They announced this past week that they would be moving towards furloughing some of their employees. Certain employees that are not integral to the day-to-day operation of the port are expected to be out of work until May 30, though it appears that there is a possibility of this being changed depending on the state of the cruise industry. While it’s not clear just how much of a hit the port has taken, this definitely points towards them needing to cut costs.
The cost of lay ups this month
Due to the unstable nature of the coronavirus pandemic, most cruise lines have been keeping many of their ships in meticulously maintained condition. This, however, requires them to have a crew tirelessly working on each ship, ensuring that they are in seafaring state and would be ready to resume operations at a moment’s notice. This is, obviously, expensive. Estimates are arriving that, for just the month of April, the cost of lay ups may end up being around $1 billion across the entire industry. While the idea is that putting this money into the ships now will help them resume making income again that much faster, it’s still a large sum.
From the stock perspective
The best way to get a wide view of this whole situation is to look at how the stock prices are faring in the cruise industry. We need to keep in mind that the entire stock market is down quite a bit right now. Travel in general is hurting much more than everything else, and that’s saying something. The cruise industry, though, has been hit even harder than airlines, at least in terms of the stock market. The Economist reported that the three biggest corporations in cruising (Carnival, Royal and Norwegian) have seen their shares plummet somewhere between 70% and 80%. Ouch.
The picture is certainly bleak. Is there any silver lining to this storm cloud? The burden is immense, but we have to remember that this is all due to an external factor that will, at some point, be dealt with. It’s not that people don’t want to cruise; they just can’t. While the pains will likely be felt for a while, we can hope that things will jump back to normal quickly once the pandemic is put to rest.