Royal Caribbean Cruises and Norwegian Cruise Line Holdings seeks additional credit

The world’s second- and third-largest cruise companies are seeking new means by which to fund the company through the current operations shutdown due to Coronavirus.

Royal Caribbean Cruises, the parent company of Royal Caribbean International as well as several other cruise brands, reportedly needs US $400-million per month to keep ships in lay-up, pay crew, and fund other fixed costs.

Royal Caribbean operates the largest cruise ships in the world

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The company is looking at a US $600-million bond offering, according to Bloomberg, as well as additional debt facilities. The move comes just days after a quarter of all its US-based staff were laid-off or furloughed to control costs.

In a video message posted to YouTube earlier this week, Royal Caribbean Cruises CEO Richard Fein didn’t address the new measures the company was exploring to raise cash.

He instead told the wider travel community that plans were in place to make the line’s ships safe to sail in the aftermath of the pandemic.

He said the company is working with experts in the field to understand the science and develop new ways of doing things to protect the health of guests and crew.

The overall goal is to not make the ships good enough, but the best they can be, Fain added.

The shutdown is costing Royal Caribbean $400-million per month

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He said it would take “a while” to reopen and that a reopening process would be gradual.

“There is no perfect solution,” he said, noting a difficult balance weighing economic and health concerns.

“We need to change the way we operate in a fundamental way,” Fain continued. “What was reasonable a month ago is no longer adequate.”

Royal Caribbean Cruises rival, Norwegian Cruise Line Holdings (which owns Norwegian Cruise Line in addition to several other brands) is also exploring new ways to raise cash.

The world’s third-largest cruise company has hired investment bank Goldman Sachs Group to explore the possible sale of a stake in the company. Like Royal Caribbean, Norwegian has also laid off staff, cut salaries and moved to a four-day work week to control costs.

The global cruise industry has come to a halt, with all the world’s major cruise lines having suspended operations due to the Coronavirus pandemic. While there were initially plans to return to service by May, those have been gradually delayed by all cruise lines until at least June.

It is likely that further delays will be announced in the coming weeks as the virus continues to spread globally.

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