Carnival Corp. says it has budgeted for ‘worst case scenario’ in global cruise shutdown

Carnival Corporation has more than enough cash on hand to survive the current global shutdown of the cruise industry, even assuming a ‘worst case scenario’, according to CEO Arnold Donald.

Donald made the comments during a media conference call Thursday.

The CEO of the largest cruise company in the world said that Carnival had prepared for a “worst case scenario” in its efforts to secure lines of credit and new loan facilities.

Arnold Donald, CEO of Carnival Corporation

Although he didn’t specify what the worst case scenario was to Carnival Corporation, it is generally assumed to mean planning for the cruise shutdown to extend until the end of the year.

Experts, such as the University of Washington, predict that the United States has already reached the peakinfection rate for COVID-19, with the virus expected to be fully under control by the end of June (assuming social distancing measures remain in place).

University of Washington projection

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It’s important to note that this projection has not yet been peer-reviewed, which is a vital part of assessing new medical research and identifies weaknesses in its assumptions, methods and conclusions.

While the CDC has suspended all US cruises until at least the end of June, leading most cruise lines to revise their suspension schedules, Donald’s comments would seem to suggest that the cruise line can remain shutdown until long after that date.

He said the company has the capital to operate for some time without revenue, but noted that Carnival is still seeking additional liquidity options in the form of stimulus packages from other governments.

The cruise line carries 12.9-million passengers to hundreds of cruise destinations every year, injecting hundreds of millions of dollars in foreign capital into local markets.

Donald said he was hopeful that existing debt could be extended as well so that the company is well-placed to weather any potential economic downturn following the current Coronavirus pandemic.

Carnival Corporation owns 9 cruise lines, including P&O Cruises

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“We want to make sure we are in a position to succeed once cruising resumes,” he said, adding that Carnival is also doing everything it can to take care of its crew and mange ships during the disruption.

Donald also added that while the company’s 9 cruise lines weren’t able to cruise, they were seeing steady demand for late 2020 and 2021 cruise seasons.

While the Coronavirus may prevent cruises from North America for some time, there are early signs that the crisis has peaked in Europe, suggesting cruises would start up again in a phased manner in various destinations around the world.

“The (start-up) will probably be certain locations, certain destinations, certain times … it’s unlikely you’ll be sailing a full fleet right away or anything like that,” he said, adding that the company’s 18 newbuilds under construction are likely to be delayed.

Donald said the company was in dialogue with its shipyard partners on timelines, delays and potential cancellations of delivery events.

Princess Cruises, a Carnival Corporation brand, recently had to delay the delivery of its new ship Enchanted Princess due to the shutdown in Italy.

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