Royal Caribbean Cruises CEO says ‘goal posts keep shifting’ gives update on cash burn

Royal Caribbean Cruises, the company that owns Royal Caribbean International, as well as Celebrity Cruises, Azamara, Silversea and several other cruise lines, is burning through up to US $275-million per month amid the current global shutdown of the cruise industry.

In a video message posted on YouTube, chairman and CEO Richard Fain said he felt like the company was stuck in the movie Groundhog Day, with constantly shifting goal posts and everyday feeling the same as the last as it tries to plan to get its ships back to sea.

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“There is no silver bullet that will magically destroy this horrible infestation,” he said, adding that every day feels like a week and every week feels like a month.

Royal Caribbean Cruises said in a SEC filing this week that it expects to incur a net loss on both a US GAAP and adjusted basis for the first quarter ended March 31, 2020 and the 2020 fiscal year.

“These are unprecedented times for all of us. Travel restrictions and stay-at-home orders are important to slowing the spread of the virus, but they have severely impacted our operations,” Fain said in the filing. “We are taking decisive actions to prioritize the safety of our guests and crew while protecting our fleet and bolstering liquidity.”

Royal Caribbean has suspended all cruises until at least June, but ongoing disruptions to travel and port operations in various regions may result in further suspensions.

“Our top priority is to ensure the safety of our guests and crew during the suspension period and when we resume operations,” said Fain. “The Company’s fleet is now either in port or at anchor and we have developed strict protocols to protect our crew that is still onboard our ships.”

The shutdown was costing Royal Caribbean $400-million per month before it put its fleet in cold lay-up

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The company has been developing a comprehensive and multi-faceted program to address the unique public health challenges posed by COVID-19.

This includes, among other things, enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing.

Royal Caribbean Cruises saw strong booking demand at the start of the year, with higher prices year-on-year, and despite the shutdown and disruption from Coronavirus, its seeing comparable demand for cruises in Q1, 2021.

Booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at reduced prices.

As of April 30, 2020, Royal Caribbean had liquidity of approximately US $2.3 billion in the form of cash and cash equivalents, giving it enough capital to weather the disruption from Coronavirus for up to a year.

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