It will take time—maybe years–to get back to “the good old days of 2019,” said Norwegian Cruise Line Holdings Ltd. CEO Frank Del Rio during a candidly blunt earnings call on Thursday.
NCL Holdings reported a first quarter loss and forecast further losses in the second quarter and the full year. While new bookings have continued since the travel shutdown and are increasing, Del Rio called 2020 a “wasted year” and said that at minimum, the company’s lines, Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas will go through the second quarter of the year without a penny of income.
Even if Norwegian can start sailing Oct. 1 as planned, he said only a few ships a month would return to service and the fleet wouldn’t likely be in full operation until the spring of 2021. Meanwhile, marketing would be ramping up. But given the traditional seven- to eight-month booking curve, and the need to offer incentives to fill ships, full pricing wouldn’t be back until sometime in 2022.
“Whether you get back to 2019 levels in late ’22 or in ’23 or, if you’re really pessimistic, in ’24 — there are so many details involved,” Del Rio said.
“It’s almost like relaunching a company from scratch when you have the entire fleet shut down and you don’t know when you’ll be able to restart because it’s not up to you. It’s up to public health officials and governments around the world”
Patience is essential, Del Rio advised. ‘It took decades to build this industry and in a matter of weeks, we dismantled it. And it’s going to take not decades to build it up again, but it’s going to take a little time…. This is going to be a recovery effort that is going to take multiple quarters, perhaps multiple years, to get back to the good old days of 2019.”
As of May 11, slightly over half of passengers on cancelled NCL sailings have requested cash refunds, the company reported. The rest have opted for future cruise credits of typically 125 per cent that are valid for sailings through 2022.
As of March 31, the company had $1.8-billion in advance ticket sales. This includes approximately $800-million in FCCs for previously announced voyage cancellations through June 30, and approximately $370-million for voyages scheduled for the remainder of 2020. The company also continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings.
The holding company secured over US $2-billion of additional liquidity in early May. This significantly strengthens the Company’s financial position and liquidity runway and it now expects to be positioned to withstand well over 12 months of voyage suspensions in a potential extended downside.
