What If NCL files for bankruptcy? And we have cruises book ?

[Ptroxx]

What’s everyone thoughts on this ?   
what do you think would happen if you have a paid in full cruise?? 
I have a May 2nd cruise and starting to worry a little bit with the market dumping as it is. NCL is now down to $7.xx A share.  
 

what’s everyone thoughts.  

[FranknBeans]

Probably all lose our monies.

[SeaWatcher65]

Very concerned.  We have four future cruise certificates (paid $500, worth $1000) apple to two cruises.  Not even thinking about buying NCL stock now.  I'm certain those cruise certificates would be worth nothing.  

[ColeThornton]

20 minutes ago, Ptroxx said:

What’s everyone thoughts on this ?   
what do you think would happen if you have a paid in full cruise?? 
I have a May 2nd cruise and starting to worry a little bit with the market dumping as it is. NCL is now down to $7.xx A share.  
 

what’s everyone thoughts.  

 

In your situation I would be more worried about how close May 2nd is considering the viral circumstances.  As far as bankruptcy goes  that's one of those questions where we all throw our hands up and say "I seriously have no clue".

 

It's weird times.

[Liljo22]

Alot of unknowns.  Normally prepaid cruises would be treated as unsecured credit and would more than likely be wiped out.  They could work out a prepackaged bankruptcy with their secured creditors that would allow the prepaid cruises to remain in place.  The bad PR from cancelling the FCC and prepaid cruises would hurt the company even more going forward which could put more stress on company post bankruptcy.   

 

Also, the low stock price doesn't necessarily mean a company is going to file for bankruptcy.  Changes in the stock prices does not affect a company's financials.  Once the stock is issued, its traded between investors and not the company.  It does mean there is financial stress currently on the company and investors are worried but the market as a whole is tanking.    

Edited March 18, 2020 by Liljo22

[GA Dave]

The only thing I had down on our September Med cruise was a Haven CN and a regular CN certificates.  I am looking at those as a loss now.

[Isabella Benjamin]

I do not believe they will go bankrupt.  Let's say the worst case scenario is that they have to dock their ships for up to a year.  They just took out a really big loan to help with the overhead expenses.  

 

At the point where people can start getting vaccinated, whenever that happens, people who have proof they've been vaccinated or proof they've had the virus would be free to cruise again.

 

I believe NCL is prepared for the worst case scenario.  Those ships are just worth too much money for their lenders to let them fail.

[ColeThornton]

3 minutes ago, Isabella Benjamin said:

I do not believe they will go bankrupt.  Let's say the worst case scenario is that they have to dock their ships for up to a year.  They just took out a really big loan to help with the overhead expenses.  

 

 

 

If any line docks their fleet for a year they are definitely going bankrupt.

[francina]

Please don't say that.....It took me two years of saving for this trip.

Sent from my Pixel 3a XL using Tapatalk

[Laszlo]

2 hours ago, FranknBeans said:

Probably all lose our monies.

You'll get 10¢ on the dollar Lol

[Isabella Benjamin]

1 hour ago, francina said:

Please don't say that.....It took me two years of saving for this trip.

Sent from my Pixel 3a XL using Tapatalk
 

It's going to be fine, Francina.  These cruise lines are not going away.  It is not like cruising is a dying industry in any way. 

 

"As of Thursday, these companies appeared to have the financial wherewithal to ride out at least a few horrible quarters at least".  I assume a few could be interpreted as three.

 

https://www.barrons.com/articles/batten-the-hatches-cruise-line-investors-the-industry-faces-a-tough-but-surmountable-slog-51584113133

[Newleno]

Well when the major airlines restructured chapter 11 tickets were honored said this in a different thread, United was chapter 11 BK for about 3 years.  The BK you have to worry about is chapter 7 liquidation, where ncl longer believes their particular cruise line is a viable entity.

[em-sk]

3 hours ago, Ptroxx said:

What’s everyone thoughts on this ?   
what do you think would happen if you have a paid in full cruise?? 
I have a May 2nd cruise and starting to worry a little bit with the market dumping as it is. NCL is now down to $7.xx A share.  
 

what’s everyone thoughts.  

 

It becomes a problem for the credit card companies.  You put in a claim that you did not receive the goods ordered and billed to your credit card.  The credit card company does a charge back against NCL.   If there is money or not in the NCL bank account is a not your problem at that point.  

 

[njhorseman]

53 minutes ago, Isabella Benjamin said:

It's going to be fine, Francina.  These cruise lines are not going away.  It is not like cruising is a dying industry in any way. 

 

"As of Thursday, these companies appeared to have the financial wherewithal to ride out at least a few horrible quarters at least".  I assume a few could be interpreted as three.

 

https://www.barrons.com/articles/batten-the-hatches-cruise-line-investors-the-industry-faces-a-tough-but-surmountable-slog-51584113133

You're overlooking the part of the article discussing debt to earnings ratios, which could quickly become unmanageable, more so for NCL and Royal than Carnival. If it gets to the point where the companies can't meet their debt service requirements then their existence as currently structured is in danger. 

[njhorseman]

1 minute ago, em-sk said:

 

It becomes a problem for the credit card companies.  You put in a claim that you did not receive the goods ordered and billed to your credit card.  The credit card company does a charge back against NCL.   If there is money or not in the NCL bank account is a not your problem at that point.  

 

If a company goes into bankruptcy, either being restructured or liquidated you are going to be an unsecured creditor waiting on line...and you're going to be far down the queue. The credit card companies should not be legally on the hook for that money because the bankruptcy and the order of who gets paid and how much is under the control of the court.

[Isabella Benjamin]

5 minutes ago, njhorseman said:

You're overlooking the part of the article discussing debt to earnings ratios, which could quickly become unmanageable, more so for NCL and Royal than Carnival. If it gets to the point where the companies can't meet their debt service requirements then their existence as currently structured is in danger. 

I guess that's why I don't have any NCL stock in my portfolio.  We switched all of our investments over to companies with very low debt to earnings rations in the fall of 2016. 🤷‍♀️

[Lionkingrichard]

Cruzely has a good read on income and profits for the big 3.

 

In reads NCL makes 2.6 million per day(2018) in profits.

 

For this month, subtract fuel, food, booze and many others cost with each sailings. We think they are paying normal wages to all crew members, so don't subtract that. 

 

How much PROFIT are they losing this month? 30-45 Million?

 

It hurts, but not bankruptcy!

[njhorseman]

11 minutes ago, Lionkingrichard said:

Cruzely has a good read on income and profits for the big 3.

 

In reads NCL makes 2.6 million per day(2018) in profits.

 

For this month, subtract fuel, food, booze and many others cost with each sailings. We think they are paying normal wages to all crew members, so don't subtract that. 

 

How much PROFIT are they losing this month? 30-45 Million?

 

It hurts, but not bankruptcy!

No cruises operating means ZERO operating revenue per day. But the debt service still has to be paid. NCL has a huge debt load which will quickly eat their cash reserves and the temporary lines of credit they've obtained. When they can't pay their loan obligations they have a big problem. 

[Lionkingrichard]

2 minutes ago, njhorseman said:

No cruises operating means ZERO operating revenue per day. But the debt service still has to be paid. NCL has a huge debt load which will quickly eat their cash reserves and the temporary lines of credit they've obtained. When they can't pay their loan obligations they have a big problem. 

Yes you are correct.

 

The BANKS will extend those lines of credit and keep making profit on those interest payments. Lots of people and companies will not survive this. Banks will hold on to loans that will keep them in business.

 

How much is BILLION dollar ship worth at the repo yard?

 

Better to keep Cruise lines in business.

[Comi.uy]

Problem with NCL is that it probably wont get any government bailout if things get really bad...

[njhorseman]

8 minutes ago, Lionkingrichard said:

Yes you are correct.

 

The BANKS will extend those lines of credit and keep making profit on those interest payments. Lots of people and companies will not survive this. Banks will hold on to loans that will keep them in business.

 

How much is BILLION dollar ship worth at the repo yard?

 

Better to keep Cruise lines in business.

If the time of zero operating income extends far enough, the cruise lines will not even be able to pay the interest on the lines of credit and they will be cut off.

 

When the worst is over and the world gets back on its feet there will be investors willing to buy that hardware because they know the cruising business can be very profitable in good times...and they will be buying at a steep discount relative to the actual value of the ships, making the investment potentially even more profitable than it would be today.

Edited March 18, 2020 by njhorseman

[dcipjr]

What happens to NCL probably will depend on how long the social distancing, travel restrictions, etc. go on. It's increasingly apparent that this social distancing period will not last two weeks. Based on China's experience, I'm thinking that Memorial Day (end of May for non-USA folks) is probably realistic for when we'll be out and about again—and that's just in our neighborhoods here at home.

 

It's probably going to be a lot longer than 30 days before the cruise industry can operate normally again. The general public's appetite for travel, as well as their disposable income, may both be constrained for a while.

 

Speaking for myself, I look forward to my next cruise—but I have no idea when it will be plausible to go again. I hope NCL can weather the storm, but if they can't, once life is back to normal, someone else will snatch up the ships, the crew, and the passengers. 

Edited March 18, 2020 by dcipjr

[manorf]

1 hour ago, njhorseman said:

If a company goes into bankruptcy, either being restructured or liquidated you are going to be an unsecured creditor waiting on line...and you're going to be far down the queue. The credit card companies should not be legally on the hook for that money because the bankruptcy and the order of who gets paid and how much is under the control of the court.

If you are in the U.K. - you simply contact your credit card - visa / mastercard and open a dispute / chargeback. I have done this and will be refunded by my bank.

[manorf]

NCL stock is mow circa $7 from circa $60. The promised refund has not materialised - so I urge everyone to open a dispute / chargeback with your financial institution.

[ano]

3 hours ago, Laszlo said:

You'll get 10¢ on the dollar Lol

I would doubt you would get that much.