Rare ontheweb Posted March 12, 2020 #1 Share Posted March 12, 2020 A quick minute on MSNBC. con---They are not really an essential industry. pro--They employ a lot of people. Link to comment Share on other sites More sharing options...
klfrodo Posted March 12, 2020 #2 Share Posted March 12, 2020 Is there such a thing as an "essential" industry? What's essential for life. Food, water, and shelter, right? Anyway, in the past, we've given the auto industry loans, and I believe the airline industry loans, to bail them out of financial crises. So there is past precedence. 1 Link to comment Share on other sites More sharing options...
ldubs Posted March 12, 2020 #3 Share Posted March 12, 2020 Not sure which gov't we might be talking about. But just for the sake of discussion, why would the US gov't bail out a non US company? I'm going to admit I'm on thin ice here, but don't these companies operate under foreign flags to avoid taxes in the US. 6 1 Link to comment Share on other sites More sharing options...
Rare SRQbeachgirl Posted March 12, 2020 #4 Share Posted March 12, 2020 11 minutes ago, ldubs said: Not sure which gov't we might be talking about. But just for the sake of discussion, why would the US gov't bail out a non US company? I'm going to admit I'm on thin ice here, but don't these companies operate under foreign flags to avoid taxes in the US. Their ships sail under foreign flags, but that doesn't necessarily mean that the company is non-US owned. For instance, Carnival Corp (Carnival, Princess...) is a U.S company based in Florida. 1 Link to comment Share on other sites More sharing options...
ldubs Posted March 12, 2020 #5 Share Posted March 12, 2020 6 minutes ago, SRQbeachgirl said: Their ships sail under foreign flags, but that doesn't necessarily mean that the company is non-US owned. For instance, Carnival Corp (Carnival, Princess...) is a U.S company based in Florida. Thanks, that makes sense. Regarding payment of taxes, I guess if anything we should criticize the tax law as opposed to a company legally taking advantage of a tax loophole. 1 Link to comment Share on other sites More sharing options...
leaveitallbehind Posted March 13, 2020 #6 Share Posted March 13, 2020 (edited) 9 hours ago, ldubs said: Thanks, that makes sense. Regarding payment of taxes, I guess if anything we should criticize the tax law as opposed to a company legally taking advantage of a tax loophole. Most of them are US based companies - RCI's HQ's are also in Miami - at the POM as a matter of fact, for another example. But most of their ship based employees are foreign and not US citizens, so therein lies the concern regarding bailing them out. However the land based employees would in most cases be US citizens. There are no tax law loopholes involved. It is the ships that are legally foreign flagged, as is the case with most maritime operations. It follows that it is the ship based employees that are exceptions to the US tax laws as the majority of ship based employees are international and non-US citizens. They are paid accordingly and responsible for their own country's taxes. Rest assured that all of the land based employees are subject to the US Federal and State tax codes. And as they are US based corporations they follow the appropriate tax codes. Read their annual reports as public documents detailing their earnings. But the bigger question is why should the government consider bailing them out? None are in financial crisis with most having intended war chests for just this type of situation. They for the most part have survived - and quite successfully - 911 and the other pandemic scares in the past. Why would this be any different? And if consideration were to be given to the cruise lines, then why not the airlines, hotels, resorts, and any other business that could claim hardship as a result of the current situation. Edited March 13, 2020 by leaveitallbehind 1 Link to comment Share on other sites More sharing options...
donaldsc Posted March 13, 2020 #7 Share Posted March 13, 2020 The cruise companies make and have larger cash reserves that we can imagine. This is how much Carnival made in 2019 - Net income of $3.0 billion or $4.32 diluted earnings per share, compared to net income of $3.2 billion or $4.44 diluted earnings per share in 2018. • Record adjusted net income of $3.0 billion, or $4.40 adjusted diluted earnings per share, compared to adjusted net income of $3.0 billion or $4.26 adjusted diluted earnings per share in 2018. Adjusted net income excludes net charges of $52 million for 2019 and net gains of $123 million for 2018. • Record total revenues were $20.8 billion, higher than $18.9 billion in 2018. O Gross cruise revenues of $20.4 billion, higher than $18.6 billion in 2018. O In constant currency, net cruise revenues of $16.0 billion, higher than $15.4 billion in 2018, an increase of 4.0%. • Gross revenue yields increased 5.4%. In constant currency, net revenue yields decreased 0.2%, comprised of a 1.0% They had a net income of 3 billion dollars in 2019 and they want a bailout. As far as I am concerned, they should be given nothing. DON 1 1 Link to comment Share on other sites More sharing options...
ldubs Posted March 13, 2020 #8 Share Posted March 13, 2020 3 hours ago, leaveitallbehind said: Most of them are US based companies - RCI's HQ's are also in Miami - at the POM as a matter of fact, for another example. But most of their ship based employees are foreign and not US citizens, so therein lies the concern regarding bailing them out. However the land based employees would in most cases be US citizens. There are no tax law loopholes involved. It is the ships that are legally foreign flagged, as is the case with most maritime operations. It follows that it is the ship based employees that are exceptions to the US tax laws as the majority of ship based employees are international and non-US citizens. They are paid accordingly and responsible for their own country's taxes. Rest assured that all of the land based employees are subject to the US Federal and State tax codes. And as they are US based corporations they follow the appropriate tax codes. Read their annual reports as public documents detailing their earnings. But the bigger question is why should the government consider bailing them out? None are in financial crisis with most having intended war chests for just this type of situation. They for the most part have survived - and quite successfully - 911 and the other pandemic scares in the past. Why would this be any different? And if consideration were to be given to the cruise lines, then why not the airlines, hotels, resorts, and any other business that could claim hardship as a result of the current situation. Thanks. I realized there was a US based company. I was under the impression that the holding company used offshore incorporation and operated under flags of convenience to, among other things, legally avoid US corporate income taxes. Not unhappy to hear that is not the case. Link to comment Share on other sites More sharing options...
ed01106 Posted March 13, 2020 #9 Share Posted March 13, 2020 17 hours ago, ontheweb said: A quick minute on MSNBC. con---They are not really an essential industry. pro--They employ a lot of people. Con - the overwhelming majority of which are not Americans. Link to comment Share on other sites More sharing options...
ATC cruiser Posted March 13, 2020 #10 Share Posted March 13, 2020 5 hours ago, ed01106 said: Con - the overwhelming majority of which are not Americans. Correct. I don’t have any figures to back this up, but I’d bet less than 1% of all their employees are US citizens. Link to comment Share on other sites More sharing options...
pacruise804 Posted March 13, 2020 #11 Share Posted March 13, 2020 While the ships themselves might employ (or contract) a small percentage of US citizens, the cruise industry as a whole affects a large amount of US citizens/residents (travel agents, hotels, port employees, etc) 2 Link to comment Share on other sites More sharing options...
leaveitallbehind Posted March 13, 2020 #12 Share Posted March 13, 2020 (edited) 10 minutes ago, ATC cruiser said: Correct. I don’t have any figures to back this up, but I’d bet less than 1% of all their employees are US citizens. Actually I think it is higher. Using RCI as an example, the last figures I am aware of indicated that full and part time US land based employees are a little over 6,000 and ship based foreign employees are around 77,000. So about 14% of their total are US. And I am assuming for this example they would be US citizens. I would guess the other US based cruise lines would be proportionately similar. Edited March 13, 2020 by leaveitallbehind Link to comment Share on other sites More sharing options...
K32682 Posted March 13, 2020 #13 Share Posted March 13, 2020 No. Government should not bail out the cruise industry. They are hardly an essential service to our global society. Nor should government bail out luxury resorts whose business suffers in the short term due to the current pandemic. We can anticipate loss of income across various sectors in our economy due to COVID-19. Government can't and should not bail out all of them. Link to comment Share on other sites More sharing options...
Joebucks Posted March 13, 2020 #14 Share Posted March 13, 2020 Well that depends on why you would bail out any industry and when. I wouldn't say cruise lines are any more or less important than a lot of other industries. I laugh at the people who say no because they employ many people overseas. Yea, that is a first for any large company. Letting the cruise industry collapse has a lot of consequences. Stock market losses, loss of (local) jobs, tax revenue (they absolutely do pay US taxes), small business losses, restaurant losses, hotel losses, etc etc. Go tell large port states like Florida that cruising doesn't mean much to their economy because Karen on the internet knows about their foreign dining staff. 2 Link to comment Share on other sites More sharing options...
chengkp75 Posted March 13, 2020 #15 Share Posted March 13, 2020 The cruise lines, regardless of where they are "headquartered" or "based" (in the US), are not US corporations, they are incorporated in other countries like Britain and US (Carnival Corp & PLC) (Carnival PLC is the British corporation, not sure how much of the operations, but I suspect the vast majority, is under this and not the US incoporated Carnival Corp), Bermuda (NCLH), and Liberia (RCI). Therefore, these corporations pay corporate taxes in the countries where they are incorporated. The only state or local taxes paid by these cruise lines in the US are for those operations that are strictly US based (not sales or revenues of the ships) or US based employees. Before anyone talks about bailing out the cruise industry, we need to see if they need bailing out. Sure, they will have a bad year, maybe even a disastrous year, but I doubt they will fail. The auto industry, for example, needed bailing out because foreign imports were undercutting them. The cruise lines are the foreign competition, they don't have anyone who can come in and undercut them. 6 Link to comment Share on other sites More sharing options...
CruiserBruce Posted March 13, 2020 #16 Share Posted March 13, 2020 1 hour ago, leaveitallbehind said: Actually I think it is higher. Using RCI as an example, the last figures I am aware of indicated that full and part time US land based employees are a little over 6,000 and ship based foreign employees are around 77,000. So about 14% of their total are US. And I am assuming for this example they would be US citizens. I would guess the other US based cruise lines would be proportionately similar. Check your math...if there are 6000 US based employees out of 83000 total employees (6K + 77K) that is about 7.25% US based employees. On the other hand, the cruise lines buy a tremendous amount of supplies, particularly food and fuel products, at the big US cruise ports, like Ft Lauderdale. Link to comment Share on other sites More sharing options...
whogo Posted March 13, 2020 #17 Share Posted March 13, 2020 "Most major cruise lines that sail out of the United States use a loophole in maritime law that enables them to register their individual ships under foreign flags, including countries such as Liberia, the Bahamas or Panama. The loophole means ships escape higher U.S. taxes as well as more stringent employment and safety laws — an issue that has become problematic when, for example, a crime is committed on board. "Before he retired from the Senate in 2015, Democratic Sen. John D. “Jay” Rockefeller IV sought to close that loophole, arguing that it allowed the industry a worldwide tax rate of just 1.3 percent on more than $17 billion in profits." https://www.rollcall.com/2020/03/12/they-arent-american-democrats-aim-to-block-aid-to-struggling-cruise-companies/ Link to comment Share on other sites More sharing options...
ATC cruiser Posted March 13, 2020 #18 Share Posted March 13, 2020 55 minutes ago, CruiserBruce said: Check your math...if there are 6000 US based employees out of 83000 total employees (6K + 77K) that is about 7.25% US based employees. On the other hand, the cruise lines buy a tremendous amount of supplies, particularly food and fuel products, at the big US cruise ports, like Ft Lauderdale. I think he meant higher than the 1 percent I stated. Link to comment Share on other sites More sharing options...
chengkp75 Posted March 13, 2020 #19 Share Posted March 13, 2020 58 minutes ago, whogo said: "Most major cruise lines that sail out of the United States use a loophole in maritime law that enables them to register their individual ships under foreign flags, including countries such as Liberia, the Bahamas or Panama. The loophole means ships escape higher U.S. taxes as well as more stringent employment and safety laws — an issue that has become problematic when, for example, a crime is committed on board. "Before he retired from the Senate in 2015, Democratic Sen. John D. “Jay” Rockefeller IV sought to close that loophole, arguing that it allowed the industry a worldwide tax rate of just 1.3 percent on more than $17 billion in profits." https://www.rollcall.com/2020/03/12/they-arent-american-democrats-aim-to-block-aid-to-struggling-cruise-companies/ It's not really a loophole in maritime law, it is merely international maritime law. And before everyone blames the "flags of convenience" for bypassing US laws, know that it was the US that started and encouraged the use of flags of convenience during WW1 to protect ships owned by US shipping lines by flagging them under neutral flags like Liberia and Panama. Flags of convenience were also a result of Prohibition, when foreign flag ships could sit outside the 12 mile limit full of alcohol, and sell it to "rumrunners" like Joe Kennedy, father of the President. 8 Link to comment Share on other sites More sharing options...
ed01106 Posted March 13, 2020 #20 Share Posted March 13, 2020 29 minutes ago, ATC cruiser said: I think he meant higher than the 1 percent I stated. Whether it is 1%, 7% or 15% the vast majority are not US citizens/taxpayers. Link to comment Share on other sites More sharing options...
navybankerteacher Posted March 13, 2020 #21 Share Posted March 13, 2020 (edited) There is little justification for a bail out as so few of the employees are US citizens or even residents. Cruising is a recreational activity, so it is hard to see it as essential to our economy. The US bail out of the auto industry in 2010 was seen as justified and necessary to keep many thousands of jobs. However, it is important to note that what was saved was the jobs of the employees, not the owners of the auto companies. The stockholders got 0. The new stock of the reorganized companies went to pay off (at least partially) the creditors who the companies owed. That’s the way the US Bankruptcy Code works: generally compensation claims like back pay and and retirement fund contributions get paid first, then secured creditors, then trade creditors - those who have provided goods and services and not been paid, , then senior unsecured creditors like banks, then junior unsecured creditors (like debenture holders) then, if there is anything left, the stock holders - like people who get OBC on cruises. Usually in bankruptcy proceedings the stockholders get nothing. Some of the creditors get paid in stock in the reorganized company. There is a very real possibility that companies like CCL, NCLand RCCL will have to go through such proceedings (generally under chapter 11 of the Code) as they reorganize. I would not want to have much of my IRA in cruise company stock at this time. Edited March 13, 2020 by navybankerteacher 1 Link to comment Share on other sites More sharing options...
leaveitallbehind Posted March 13, 2020 #22 Share Posted March 13, 2020 1 hour ago, CruiserBruce said: Check your math...if there are 6000 US based employees out of 83000 total employees (6K + 77K) that is about 7.25% US based employees. On the other hand, the cruise lines buy a tremendous amount of supplies, particularly food and fuel products, at the big US cruise ports, like Ft Lauderdale. Yep - good catch, you are correct. Thanks for checking my flawed math! 1 Link to comment Share on other sites More sharing options...
leaveitallbehind Posted March 13, 2020 #23 Share Posted March 13, 2020 36 minutes ago, ATC cruiser said: I think he meant higher than the 1 percent I stated. I did, but CruiserBruice's math is correct and I incorrectly overstated the percentage. Link to comment Share on other sites More sharing options...
chipmaster Posted March 13, 2020 #24 Share Posted March 13, 2020 11 hours ago, donaldsc said: The cruise companies make and have larger cash reserves that we can imagine. This is how much Carnival made in 2019 - Net income of $3.0 billion or $4.32 diluted earnings per share, compared to net income of $3.2 billion or $4.44 diluted earnings per share in 2018. • Record adjusted net income of $3.0 billion, or $4.40 adjusted diluted earnings per share, compared to adjusted net income of $3.0 billion or $4.26 adjusted diluted earnings per share in 2018. Adjusted net income excludes net charges of $52 million for 2019 and net gains of $123 million for 2018. • Record total revenues were $20.8 billion, higher than $18.9 billion in 2018. O Gross cruise revenues of $20.4 billion, higher than $18.6 billion in 2018. O In constant currency, net cruise revenues of $16.0 billion, higher than $15.4 billion in 2018, an increase of 4.0%. • Gross revenue yields increased 5.4%. In constant currency, net revenue yields decreased 0.2%, comprised of a 1.0% They had a net income of 3 billion dollars in 2019 and they want a bailout. As far as I am concerned, they should be given nothing. DON Don, Read this and let me know if you still think the same, looking at revenue and net income can be misleading, and even more a joke if you wan't to base this years revenue and growth based on last year. You did hear this thing called COVID19 and a few lines are shut down for a little while and no revenue generation, but debt and other obligations are due come hell, national emergency or whatever, LOL https://seekingalpha.com/article/4331763-carnival-dividend-must-be-cut Link to comment Share on other sites More sharing options...
chipmaster Posted March 13, 2020 #25 Share Posted March 13, 2020 Cruise business has little economic or strategic or cultural connection to the US, so a bailout using US tax payer money would be way below say; Airlines, auto, hospitals, insurance, etc.. get at the very back of the line cruise companies 2 Link to comment Share on other sites More sharing options...
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