At Sea At Peace

Didn't know that. Thanks much. With the potential BS going on in the USA based Yacht Club we'll take another look. We were looking at a B2B out of Miami at the beginning of November (as recall) then the price jumped absurdly. Will look again. They've have had quite a number of price increases, were very proud to announce such in interviews as evidence of their demand and affirming the 'no deals to fill ships' line. It was interesting to watch unfold as this was not their model with MSC Yacht Club which they undercut the NCL Haven by more than half for years and years. https://latteluxurynews.com/2022/12/22/price-rise-for-explora-journeys-from-mid-january/

Not liking the continued examples of the YC not being the YC we sailed so many B2B's on. I guess without Roy, Vishnu, etc. (wow were we SPOILED) the butler staff is newer and younger and a bit shy on enforcement or possibly intimidated by management. If such continues to be reported, we're not going on the next two. Could someone start a thread "Monitoring the Yacht Club Experience - 2023" where those on the upcoming cruises can keep us all up to date on 'what's up? I don't stay enough on CC to Author such. Maybe @JAGR could give it a go? 😉

Hopefully, the referenced abhorrent behavior and practice of allowing non-YC guests into the YC is identified immediately by MSC as a real threat to that luxury venues' attractiveness and curtailed 100% ASAP. We've sailed 7 B2B's in the YC on 3 different ships and never encountered such; other than an occasional tour group coming through on a guided future reservations sales pitch. Also, with reference to the YC Director, there is a team of butlers, bartenders, hosts, etc. that should be well empowered to support and enforce the use restrictions to YC stateroom guests of everything; bars and lounges, dining, pools and poolside venues, cabanas, etc. Again, hopefully MSC is made aware of this and stops it cold turkey. If we read it continuing, we're not going on our YC bookings this Fall or next year and we'll tell them exactly why.

Sorry, but in the world of finance and simple business, depreciation is an expense, the usage and exhaustion of the cost of the asset over time. The cruise line doesn't write off the cost of new ship builds when delivered, they write them off as they are being used. Straight-forward Generally Accepted Accounting Principles GAAP. NCLH, like most public companies, use ACCRUAL basis of accounting and financial reporting, not the CASH basis. No, they did not, not for the quarter ended 12/31/2022 or for the year ended 12/31/2022. If you'd look at that statement and then the "operating section" of financial income statement for the quarter and year, they LOST $280,969,000 in the quarter ended 12/31/2022. In that was $202,112,000 of depreciation. Although the theory that depreciation isn't an expense is debunked, they still would have lost $78,857,000! 🤥 That is excluding the $201,126,000 for interest expense and other (and yes, you also have to accrue and pay interest). If you'd look at that statement and then the "operating section" of financial income statement for the quarter and year, they LOST $1,551,757,000 in the year ended 12/31/2022. In that was $749,326,000 of depreciation. Although the theory that depreciation isn't an expense is debunked, they still would have lost $802,431,000! 🤥 That is excluding the $724,946,000 for interest expense and other (and yes, you also have to accrue and pay interest). Cash did not increase year over year. Cash DECREASED from $1,506,647,000 to $946,987,000 or $559,660,000! To make matters worse, the yearly cash decrease was not even reflective of the true loss from operations as it was MASKED by the cash increase attributed to an increase in CUSTOMER DEPOSITS (Advance ticket sales) from $1,561,336,000 to $2,516,521,000 or $955,185,000! No, they are not only not paying off debt faster, they are not even paying off debt. They are incurring more debt, at a higher cost with tighter and more complex covenants, terms and conditions. Their bonds are, with the exception of certain highly priority secured issuances, considered 'junk bonds' in the secondary market. 😉

Here's a peek at CCL's 2020-2022 results and status. They need to DOUBLE (yep, screaming) revenues and keep costs even in order to break even in 2023. They still have net equity, but at these loss rates of almost $27 BILLION over the 3-years, it's an up the stream moment without a paddle.

😁 They account for amounts actually received as advanced ticket sales, so just your $500 deposit. It would very informational if they would stratify their reporting on these into components ~ * advanced ticket sales - payments made in full * advanced ticket sales - partial payments, not in full * advanced ticket sales - deposits only (refundable and nonrefundable)

In another filing, the cost of financing is getting expensive and more complex. https://www.sec.gov/ix?doc=/Archives/edgar/data/1513761/000110465923026003/tm237748d1_8k.htm Item 1.01. Entry into a Material Definitive Agreement. Amended Commitment Letter On February 22, 2023, NCL Corporation Ltd. (“NCLC”), a subsidiary of Norwegian Cruise Line Holdings Ltd., entered into the second amended and restated commitment letter (the “Amended Commitment Letter”) with funds managed by affiliates of Apollo Global Management (the “Apollo Funds”), which amends, restates and supersedes the amended and restated commitment letter, dated July 26, 2022, among NCLC and the Apollo Funds. Pursuant to the Amended Commitment Letter, the Apollo Funds have agreed to purchase from NCLC an aggregate principal amount of up to $650 million of senior secured notes at NCLC’s option. Such commitments are available through February 2024, with an option for NCLC to extend such commitments through February 2025 at its election. NCLC has the option to make up to two draws, consisting of (i) $250 million of senior secured notes due 2028 that, if issued, will accrue interest at a rate of 11.00% per annum subject to a 1.00% increase or decrease based on certain market conditions at the time drawn (the “Class B Notes”) and (ii) $400 million aggregate principal amount of 8.00% senior secured notes due five years after the issue date (the “Backstop Notes”). If drawn, the Class B Notes will be subject to an issue fee of 2.00%, and the Backstop Notes will be subject to a quarterly duration fee of 1.50%, as well as an issue fee of 3.00%. Secured Notes Indenture On February 22, 2023, in connection with the execution of the Amended Commitment Letter, NCLC issued $250 million aggregate principal amount of 9.75% senior secured notes due 2028 (the “Class A Notes” and, collectively with the Class B Notes and the Backstop Notes, the “Notes”), subject to an issue fee of 2.00%. NCLC intends to use the net proceeds from the Class A Notes for general corporate purposes. The Class A Notes were issued pursuant to an indenture (the “Indenture”), dated February 22, 2023, by and among, inter alia, NCLC, as issuer, the guarantors named therein and U.S. Bank Trust Company, National Association, as trustee, principal paying agent, transfer agent, registrar and security agent. If issued, the Class B Notes and the Backstop Notes will also be issued pursuant to the Indenture. Interest on the Class A Notes will accrue from February 22, 2023 and is payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on May 15, 2023, at a rate of 9.75% per year. The Class A Notes will mature on February 22, 2028 unless earlier redeemed or repurchased. The Class A Notes and the related guarantees are, and the Class B Notes and the Backstop Notes and the related guarantees, if issued, will be, secured by first-priority interests in, among other things and subject to certain agreed security principles, shares of capital stock in certain guarantors, our material intellectual property and two islands that we use in the operations of our cruise business. The Class A Notes are, and the Class B Notes and the Backstop Notes, if issued, will be, guaranteed by our subsidiaries that own the property that secures the Notes, as well as certain additional subsidiaries whose assets do not secure the Notes. NCLC may, at its option, redeem the Class A Notes, in whole or in part, (i) at any time and from time to time prior to February 22, 2025, at a “make-whole” redemption price, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date, and (ii) on or after February 22, 2025, at the redemption prices set forth in the Indenture, plus accrued and unpaid interest and additional amounts, if any, to, but excluding, the redemption date. The Indenture includes requirements that, among other things and subject to a number of qualifications and exceptions, restrict the ability of NCLC and its restricted subsidiaries, as applicable, to (i) incur or guarantee additional indebtedness; (ii) pay dividends or distributions on, or redeem or repurchase, equity interests and make other restricted payments; (iii) make investments; (iv) consummate certain asset sales; (v) engage in certain transactions with affiliates; (vi) grant or assume certain liens; and (vii) consolidate, merge or transfer all or substantially all of their assets. Additionally, upon the occurrence of specified change of control triggering events, NCLC may be required to offer to repurchase the Notes at a repurchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. The Indenture also contains customary events of default. The foregoing description of the Amended Commitment Letter, the Indenture and the Class A Notes does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended Commitment Letter and the Indenture (including the form of Class A Note), as applicable, which are attached as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K and incorporated herein by reference. Backstop Agreement On February 23, 2023, NCLC entered into a backstop agreement (the “Backstop Agreement”) with Morgan Stanley & Co. LLC (“MS”), pursuant to which MS has agreed to provide backstop committed financing to refinance amounts outstanding under NCLC’s senior secured credit facility that are coming due in January 2024. Pursuant to the Backstop Agreement, NCLC may, at its sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes (the “Unsecured Notes”) up to an aggregate principal amount sufficient to generate gross proceeds of $300 million at any time between October 4, 2023 and January 2, 2024.

Yep. It is bleak in the short-term though. They simply have run dry on the net equity and despite the 87% of capacity in the 4th quarter, still lost $482,480,000. To 'cover that loss' between another 13% capacity fill, net of cost, they'll also need an increase in revenues via fees (passenger ticket per se and onboard items or cost cutting) of 31% ($482,480,000/$1,519,129,000) just to break even.

"As of December 31, 2022, the Company’s advance ticket sales balance, including the long-term portion, was $2.7 billion" "the Company’s liquidity was approximately $1.9 billion, consisting of cash and cash equivalents of $947 million and a $1 billion undrawn commitment" Again, they only have 1/3 of the advance deposits in cash. 😯

It's finally happened, they have totally depleted their net equity to a de minimis level. https://www.sec.gov/Archives/edgar/data/1513761/000117184323001224/exh_991.htm Big WORD SALAD continues as to how rosy everything is going to be in the Press Release, but the numbers don't lie.

Another very intriguing MSC post. The second we've seen in just over a week. Essentially, 'we dislike the experience so much we've repeated booking 6 times' is a stunning oxymoron in decision structure. 😲 Comments? Yep. MSC cruise line is, in fact, a subsidiary of the parent company that is the shipping company. The executive management, administrators, departments and individual ship staff and crew are under the auspices of the MSC cruise line corporate Board of Directors. It's nice to have a 'sugar daddy' parent company. MSC doesn't have the exponential debt that RCL, NCLH and CCL have incurred without such. So, consider a change to cruise those lines if one wants to pay the extra cost that that have to charge to cover their massive increased interest costs; a passenger doesn't get 'anything extra' on the cruise for interest expense. 😉

Why, isn't the Yacht Club is on MSC ships. The Haven is on NCL ships. The Retreat . . . . . Seriously. Nice try at classifying an entire group of cruisers. 🤧 But I just did. 🙃

One of the most inexplicable MSC posts of late. First, a complaint because a solo on a 3N 'interior' on one of MSC's newer ships, with drinks, etc. is too good a deal?🤨 Second, the assertion via 'why devalue an already diminished experience?' is based upon exactly what line of thought and what supporting reference or data? Every major line, the big publicly owned three and private MSC, cruise line social media forums are rife with complaints about rising costs and reduced quality. 🍎 to 🍎 Finally, the assertion via 'considering how understaffed they are?" is based upon exactly what line of thought and what supporting reference or data? 🤨

Yep. There are sometime ones who have been chased for a lifetime by maturity, wisdom and their combined influence also on perspective, yet continue to outrun all of them. 😉

It is what it is. Times are tough. Cost cutting is in place, not well received and prices will certainly have to go up. And it will still be really tough.

Well, they can (and have) added 'every cherry they could' to the press release laden with statistical slants. Although IMO they are 'best positioned' of the big three publicly held cruise lines, it's not a good omen that the following still is 'in there' and such are problematic. 1. "As of December 31, 2022, the Group’s customer deposit balance was at a record $4.2 billion." They have $1.935 B of cash and cash equivalents (the purport anther approximate $1 B via undrawn revolving credit facility and $700 M 'commitment' for 364-day short term loan). But they have already spent 55% of the customer deposits on all future cruise out into 2-years worth of years. Some might say, well they always did. However, not with (a) this new massive level of debt (b) the astronomical costs to operate and (2) below. 2. Despite almost full occupancy of 95% of capacity for the quarter ended 12/31/2022, they still LOST $500 M. 🤨 They focus on 'operating income of $15 M for the quarter, but as for all business and individuals, you have to pay the interest on your debt and related expenses (another $515 M in costs). Again, IMO RCL is in the best position. This earnings press release should be a warning to the other public cruise lines that are not remotely in the same position. If the increase occupancy to 100%, with an operating net income of $15 M on $2.604 B of operating cruise revenues, a 5% increase would result in $750,000 of additional operating net income. An increase to 110% similarly would equate to $2.2 Million of such. So, do we wonder why the 'cost cutting' comments of cruisers are so common?

That kind of absolutism applied uniquely to MSC 'reviews' is certainly not aligned with what's raging on RCCL, NCL and CCL reviews. But, yes, folks do 'rave' about MSC. 😉 MSC has never indicated it has become cost conscious. They are privately owned by the largest commercial shipping company and family and are determined to become dominant in the US and Caribbean ports. They have already become the single largest brand in Europe in 2019 pre-pandemic, and are adding some of the most inspiring new ships since and have added an entire new luxury cruise line. https://cruiseindustrynews.com/cruise-news/2019/08/three-companies-and-eight-brands-dominate-european-cruise-markets/ "MSC Cruises is the single largest brand in Europe, however, with an estimated passenger capacity of 2.2 million."

It would be nice to clarify the Class of ships one is comparing from one line to another. MSC Divina is Pre-Seaside Class, Pre-Meraviglia Class (and the upcoming World Class) and it would be more comparable for comparison of Seaside Class to Royal Quantum and Meraviglia to Oasis for example. As such, it would be unbalanced If one were to sail on a Radiance Class Royal or Freedom Class Royal and state to confirm one would never sail Royal again, even though that would be based with unexperienced cruises in the Quantum and Oasis Class (and the upcoming Icon Class).

As always, hope all is well with the passenger. Not good to hear about the stomach issues (was it reported as Noro?). Hate that on a cruise more than anything. It's nice to see the Disney ships when they come in. They're just appealing to eye. In Port Everglades we have many new Celebrity and Royal ships that are awesome, but somehow Disney ships have that.... We'll be welcoming Disney (for the first time as a POD), specifically the Dream, to a new redesigned Terminal 4 at Port Everglades this upcoming Fall 2023 on November 20th. Looking forward to seeing her come and go on the short Disney itineraries over the late Fall early Spring season. There's a lot going on for development at the Port, commercial cargo, cruise terminals, conference center, parking, etc., an increasing # of ships and passenger counts, assisted by an airport literally right next door and hotels aplenty. In a lot of ways more accessible than PC or POM. From the City meeting.

Too bad they can't get off, because the NHL All-Star game is nearby, the FLL beach is the site of the NHL/Truly Hard Selzer/Honda festivities starting today though Saturday.

Yep, the webcam operator has taken over manual control to focus on the Disney Wish. https://www.portevergladeswebcam.com/

We live on the beach a mile or so up from the port entrance and my wife saw her again minutes ago. The second time of late. They are returning from a 1/30/2023-2/2/2023 cruise back to Port Canaveral so, as last time, it is likely a medical emergency for the stop at Port Everglades. The last recent one, I believe, was a crew member. https://www.portevergladeswebcam.com/ She should be appearing soon on the PTZ webcam.

Long, ongoing 47-PAGE Thread FYI.

I believe that you are right. They certainly would not issue new debt to pay off early maturing debt if the interest rate wasn't lower. So, a look at details. https://finsight.com/sponsor-18150-norwegian-cruise-lines-holdings-ltd?products=HYC&regions=USOA New Issuance - 9% Payoff Maturity Early - 12.25-12..50%