Royal Caribbean lets go a quarter of US workforce, executives agree to pay cut

Royal Caribbean Cruises, the parent company of Royal Caribbean International, Celebrity Cruises, TUI Cruises, Pullmantur, Azamara and Silversea, is laying off 26% of its US-based workforce.

The move comes after the CDC in the United States released a new report into the extent of the Coronavirus impact on cruise ships sailing from US ports, and ordered that all American cruise activities be suspended until at least the end of June.

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“Earlier today, we told our employees the difficult news that we were laying off or furloughing approximately 26 percent of our more than 5,000 coworkers in the United States,” the company said in a statement Wednesday.

“We earlier announced the early conclusion of many crew contracts. The circumstances of the pandemic made this action unavoidable, and it hurts to part ways with so many good and talented people,” the statement added.

The measures are part of a series of moves taken by the world’s second-largest cruise line to mitigate the impact of the suspension of its global cruise activities.

Earlier this week, it was announced that the cruise line’s leadership had agreed to 25% pay cuts until at least the end of September, while Richard Fain, the chairman and CEO of Royal Caribbean Cruises, has agreed to forego payment of his base salary.

Key Royal Caribbean Cruises executives taking a pay cut:

Jason Liberty, Executive Vice President, Chief Financial Officer

Michael Bayley, President and CEO, Royal Caribbean International

Lisa Lutoff-Perlo, President and CEO, Celebrity Cruises

The adjustments are effective until the end of September, 2020.

The Board of Directors has also approved to forego all cash retainers and fees payable for Board and committee service, effective from April 1, 2020 through September 30, 2020, according to the statement.

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Royal Caribbean, like all other major cruise lines, has had to suspend its cruise operations globally, turning its 27-ship fleet of vessels into massive liabilities. In March, the company entered into a US $2.2 billion secured credit facility to bolster its liquidity to US $3.6 billion.

That includes cash deposits and existing undrawn revolving credit lines. Royal Caribbean added that it has financing committed for the ships that are on order, which includes Odyssey of the Seas, its new Quantum Ultra-class, the new Oasis-class Wonder of the Seas and three Icon-class ships and a sixth Oasis-class vessel.

The Oasis-class are the largest in the world, and are usually a major cash cow for the cruise line. The refurbishment of the line’s third Oasis-class ship, Allure of the Seas, was recently suspended due to the Coronavirus pandemic.