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

[fstuff1]

6 hours ago, The Wanderer_112358 said:

It is really just a matter of time now.

My date guess is that it will be Chapter 7 in about the second week in May. 

 

Your guess?

 

you have no clue about ncl's finances, do u?

they have enuf cash/credit to cover expenses thru the yr w/o 1 single customer

[fstuff1]

3 hours ago, Trimone said:

I think the only cruise company that’s financially safe is Virgin Voyages, they have no commitment have offered 200% to rebook, and full refunds plus % off when you do rebook, they are working flat out in Italy getting the second ship ready.

its all about the leases on the ships, 14 in a fleet and no where to go? Deadly 💀 

 

depends on how much $ they have in the bank.

if Virgin Voyages is a separate entity from the Virgin empire, then the smart thing for Branson to do is file bankruptcy once that company's cash runs out. rebuy his 2 ships at a discount.

 

and if you think 14 empty ships is deadly, think 100+ empty ships from Carnival and the multiple cruise lines under them. (ie: Princess, Holland America, etc)

 

59 minutes ago, mrclean1 said:

 NCL will be the first to fall, perhaps followed closely by RCL, CCL may very well be the only one to somewhat survive the coming massacre.

 

carnival will be the 1st.

 

they no longer can get credit from the banks.

they diluted shareholder equity and offered 10%+ interest rates to raise cash last week. 

offering 10%+ interest when the Fed rate is near 0%? that's desperate!

 

Also, carnival will have TEN new ships across their lines delivered within the next year!

thats going to be alot of new debt they will be paying on

 

55 minutes ago, Cruising Chuck said:

Disney would go WAYYYYY before NCL.  

 

Disney?! they only have 4 ships.
Why do you say Disney will go before ncl?

 

Edited April 4, 2020 by fstuff1

[roger001]

26 minutes ago, Upper Deck Dad said:

What happens to those of us that have cruises in the fall with money tied up with NCL?  Should we cancel and get our money back?

No one has a clue.  All just guesses and your's is as good as any.  However and personally, with such uncertainty about the future of cruise lines, I would not book anything until this is all over, and I would try to get all the money back I could.  Even now, them either having the cash to return or willing to actually return it, that is a real uncertainty.   If they file bankruptcy, you very likely will not get anything.  There is absolutely no answer as to what the future will hold for them.  

[Murph269]

40 minutes ago, fstuff1 said:

 

you have no clue about ncl's finances, do u?

they have enuf cash/credit to cover expenses thru the yr w/o 1 single customer

Where are you getting this info? I’m not doubting you, I’m genuinely curious and hope you’re right since NCL owes me 4K in a refund that I’m scared I won’t receive. When I was trying to research their financial situation, I found that they have something like 250 million cash on hand, which is nowhere near enough to cover their expenses with no revenue coming in. Do they have a large line of credit I’m not aware of?

[njhorseman]

1 hour ago, fstuff1 said:

 

you have no clue about ncl's finances, do u?

they have enuf cash/credit to cover expenses thru the yr w/o 1 single customer

 

41 minutes ago, Murph269 said:

Where are you getting this info? I’m not doubting you, I’m genuinely curious and hope you’re right since NCL owes me 4K in a refund that I’m scared I won’t receive. When I was trying to research their financial situation, I found that they have something like 250 million cash on hand, which is nowhere near enough to cover their expenses with no revenue coming in. Do they have a large line of credit I’m not aware of?

Fstuff1...you're the one with no clue. I suggest you look at NCL's balance sheet.

 

As of December 31, 2019, the latest publicly available data...which is going to look even worse when the first quarter 2020 financials are posted...NCL had cash of $253 million on hand and total current assets (cash, prepaid expenses, accounts receivable) of $730 million.

 

However, NCL has current liabilities of $3.584 billion including $1.955 billion in advance ticket sales alone. 

 

If only a minority of passengers request a cash refund for their already cancelled cruises or future cruises, NCL doesn't have the cash to pay them, not to mention that NCL also won't have the cash to pay the current portion of their long term debt, which at $746 million is by itself more than their current assets.

 

The balance sheet can be found on page 75 of their Form 10-K:

http://www.nclhltdinvestor.com/static-files/ebce2e02-cf0d-42ce-b3f6-4c91efcd3c9a

 

Edited April 4, 2020 by njhorseman

[Murph269]

1 hour ago, njhorseman said:

 

Fstuff1...you're the one with no clue. I suggest you look at NCL's balance sheet.

 

As of December 31, 2019, the latest publicly available data...which is going to look even worse when the first quarter 2020 financials are posted...NCL had cash of $253 million on hand and total current assets (cash, prepaid expenses, accounts receivable) of $730 million.

 

However, NCL has current liabilities of $3.584 billion including $1.955 billion in advance ticket sales alone. 

 

If only a minority of passengers request a cash refund for their already cancelled cruises or future cruises, NCL doesn't have the cash to pay them, not to mention that NCL also won't have the cash to pay the current portion of their long term debt, which at $746 million is by itself more than their current assets.

 

The balance sheet can be found on page 75 of their Form 10-K:

http://www.nclhltdinvestor.com/static-files/ebce2e02-cf0d-42ce-b3f6-4c91efcd3c9a

 

Thank you for posting this, and confirms what I suspected. My hope is that with NCL being so profitable leading up to this pandemic, that banks would likely be willing to loan them money since we know that this pandemic will

eventually subside. 

[ColeThornton]

9 minutes ago, Murph269 said:

Thank you for posting this, and confirms what I suspected. My hope is that with NCL being so profitable leading up to this pandemic, that banks would likely be willing to loan them money since we know that this pandemic will

eventually subside. 

 

 

It's going to be interesting to see how it plays out.  NCL, like the other cruise lines, airlines, etc, already borrowed an extra $700M last month. 

[njhorseman]

35 minutes ago, Murph269 said:

Thank you for posting this, and confirms what I suspected. My hope is that with NCL being so profitable leading up to this pandemic, that banks would likely be willing to loan them money since we know that this pandemic will

eventually subside. 

 

24 minutes ago, ColeThornton said:

 

 

It's going to be interesting to see how it plays out.  NCL, like the other cruise lines, airlines, etc, already borrowed an extra $700M last month. 

Correct, Cole Thornton.

 

In March NCLH entered into and fully borrowed against a new $675 million credit agreement maturing on March 4, 2021 and secured by the Norwegian Epic. Together with an earlier credit agreement NCLH has now borrowed $1.55 billion. Details are in this 8-K dated March 12: http://www.nclhltdinvestor.com/static-files/ebce2e02-cf0d-42ce-b3f6-4c91efcd3c9a

[SeaShark]

Sigh...

 

The problem with the whole Cruise Critic Chicken Little discussions of deposits, bankruptcies, and other fictional situations is that not all of the facts are being considered. For example, deposits are not revenue to a cruise line until the sailing takes place..it isn't their money to use. This is all governed by the Federal Maritime Commission's rules on financial responsibility.

 

The FMC requires cruise lines to have a bond or other financial surety available to refund passenger deposits if the cruise line fails to provide a scheduled cruise (performance) or for death or injury on a voyage (casualty). This requirement applies to cruise lines that embark from a U.S. port and have at least 50 berth accommodations.

 

The company (typically an insurance company) that issues the bond or other financial surety processes claims made for cruise cancellation or death or injury.

 

IF a cruise line were to go out of business, unearned revenue (deposits) are protected and would be refunded.

 

[roger001]

They could have saved a couple of bucks with the card I just got from them today.  It was a very nice card welcoming me as a suite guest, anxiously awaiting arrival for my cruise, and telling me the amenities I can expect once aboard.  I don't have any cruises book, and they don't have any ships sailing.  I just checked to make sure they don't actually have me booked on anything. They don't..But I did notice they have Bermuda and Alaska cruise advertised for sailing on May 15th and May 30th.  The need to get it together, confront publically how bad this situation is, admit the probable reality of the near future, and at least get some sympathetic support.  Showing they got at least a realistic handle on it might even increase their stock values.  

Edited April 4, 2020 by roger001

[SeaShark]

To further the post above, the FMC handles this through the Bureau of Certification and Licensing's Office of Passenger Vessels and Information Processing (OPVIP).

 

OPVIP issues certificates to operators of passenger vessels with 50 or more berths and that embark passengers from U.S. ports (PVOs). The Certificate (Performance) evidences that the PVO has on file with the Commission acceptable coverage to satisfy any liability incurred for nonperformance of transportation, such as when a PVO declares bankruptcy and fails to complete the cruises booked. The coverage is used to reimburse passengers when the PVO fails to perform cruises as contracted and has taken no further actions to refund passengers. The Certificate (Casualty) evidences that the PVO has acceptable coverage to satisfy any liability incurred for death or injury on file with the Commission.

[fstuff1]

3 hours ago, Murph269 said:

Where are you getting this info? I’m not doubting you, I’m genuinely curious and hope you’re right since NCL owes me 4K in a refund that I’m scared I won’t receive. When I was trying to research their financial situation, I found that they have something like 250 million cash on hand, which is nowhere near enough to cover their expenses with no revenue coming in.

 

Do they have a large line of credit I’m not aware of?

 

$1.5B line of credit:

https://seekingalpha.com/news/3552335-norwegian-cruise-line-holdings-draws-1_55b-under-credit-agreement

 

from what i read, that and the cash on hand will get them through to the end of the year

[njhorseman]

1 hour ago, SeaShark said:

Sigh...

 

The problem with the whole Cruise Critic Chicken Little discussions of deposits, bankruptcies, and other fictional situations is that not all of the facts are being considered. For example, deposits are not revenue to a cruise line until the sailing takes place..it isn't their money to use. This is all governed by the Federal Maritime Commission's rules on financial responsibility.

 

The FMC requires cruise lines to have a bond or other financial surety available to refund passenger deposits if the cruise line fails to provide a scheduled cruise (performance) or for death or injury on a voyage (casualty). This requirement applies to cruise lines that embark from a U.S. port and have at least 50 berth accommodations.

 

The company (typically an insurance company) that issues the bond or other financial surety processes claims made for cruise cancellation or death or injury.

 

IF a cruise line were to go out of business, unearned revenue (deposits) are protected and would be refunded.

 

 

1 hour ago, SeaShark said:

To further the post above, the FMC handles this through the Bureau of Certification and Licensing's Office of Passenger Vessels and Information Processing (OPVIP).

 

OPVIP issues certificates to operators of passenger vessels with 50 or more berths and that embark passengers from U.S. ports (PVOs). The Certificate (Performance) evidences that the PVO has on file with the Commission acceptable coverage to satisfy any liability incurred for nonperformance of transportation, such as when a PVO declares bankruptcy and fails to complete the cruises booked. The coverage is used to reimburse passengers when the PVO fails to perform cruises as contracted and has taken no further actions to refund passengers. The Certificate (Casualty) evidences that the PVO has acceptable coverage to satisfy any liability incurred for death or injury on file with the Commission.

The maximum bond requirement for a passenger vessel operator (that is defined as the cruise line, not an individual cruise ship) is $32 million...chump change compared to NCL's nearly $2 billion liability for advance ticket sales. 

 

This bond was never intended to cover circumstances such as we are currently experiencing, nor would any insurer take on a potential liability of that magnitude. The citation from FMC follows, and the direct citation from the Code of Federal regulations is given below the FMC citation.

 

https://www.fmc.gov/resources-services/passenger-vessel-operators/

Passenger Vessel Operators

Passenger Vessel Operators (PVOs) subject to FMC regulations are cruise lines that operate vessels having berth or stateroom accommodations for 50 or more passengers that embark passengers at U.S. ports.

PVO PERFORMANCE CERTIFICATES

A PVO must apply for and obtain a FMC-issued Performance Certificate before advertising or booking passengers on a cruise embarking passengers at U.S. ports. The actual coverage amount is determined by the Commission (currently capped at $32 million). 

 

 

 

https://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=cdc8f1b317ea34b67d68e4cc329ee3aa&rgn=div5&view=text&node=46:9.0.1.2.17&idno=46#sp46.9.540.a

 

(j) The amount of: the insurance as specified in §540.5(a), the escrow account as specified in §540.5(b), the guaranty as specified in §540.5(c), or the surety bond as specified in §540.6 shall not be required to exceed $15 million for one year after April 2, 2013. Twelve (12) months after April 2, 2013, the amount shall not exceed $22 million, and twenty four (24) months after April 2, 2013, the amount shall not exceed $30 million. Every two years, on the anniversary after the cap on required financial responsibility reaches $30 million, the cap shall automatically adjust to the nearest $1 million based on changes as reflected in the U.S. Bureau of Labor Statistics' Consumer Price Index. The Bureau of Certification and Licensing will determine the amount of each adjustment and transmit that information to the Secretary of the Federal Maritime Commission for publication on the Commission's Web site (www.fmc.gov) and in the Federal Register with an effective date that is no less than sixty (60) days after Federal Register publication.

Edited April 4, 2020 by njhorseman

[Newleno]

oh boy yih, outside of the dismal financial situation,   there will be minimal demand, there will be no disposable income for those that want to cruise,  So a few ships here and there of course niche markets but other than that the gig is up there is no debate, just a matter of time before bk.  I have asked this before, who is going to provide DIP financing to a chapter 11 company, whose business plan has close to zero demand for their product?  Therefore cruise lines will then go chapter 7 liquidation, So many people are getting laid off, soon  I will be one of them.  

Edited April 4, 2020 by Newleno

[roger001]

51 minutes ago, Newleno said:

oh boy yih, outside of the dismal financial situation,   there will be minimal demand, there will be no disposable income for those that want to cruise,  So a few ships here and there of course niche markets but other than that the gig is up there is no debate, just a matter of time before bk.  I have asked this before, who is going to provide DIP financing to a chapter 11 company, whose business plan has close to zero demand for their product?  Therefore cruise lines will then go chapter 7 liquidation, So many people are getting laid off, soon  I will be one of them.  

That's a real consideration.  Hadn't even thought of the many, many  bankrupt people soon to be.  

[Love my butler]

6 hours ago, roger001 said:

That's a real consideration.  Hadn't even thought of the many, many  bankrupt people soon to be.  

I have.  They live all around me.  Most are telling me they can hang on for 2 months then they are done.

[npcl]

12 hours ago, ColeThornton said:

 

 

It's going to be interesting to see how it plays out.  NCL, like the other cruise lines, airlines, etc, already borrowed an extra $700M last month. 

All of the major cruise companies have drawn down their revolving credit lines.  All of them need considerably more cash.

 

CCL was the first to go to the market to get 6.25 billion. Looking at their last quarterly results (current assets vs current liabilities), that should give them 4-5 billion in cash for operational expenses (including the 2.8 billion from their line of credit).  The money was very expensive by should be enough to get them through the end of they year.  CCL is running at about get 45% of their passengers to take FCCs instead of cash. That saves them over 2 billion.

 

RCL and NCLH will also have to have their go at getting additional money fairly soon.  Will be interesting to see what their costs are when the time comes.

Edited April 5, 2020 by npcl

[CruiseMH]

Without reading all the financial reports and statistics for me it is absolutely unimaginable that the big cruise lines don`t have enough money to be able to survive such a crisis.

Yes, there are up to six months with almost no income.But at the same time their costs are reducing heavily as well.(almost no fuel, reduced salaries for the employees, no port fees and so on) They must have made dozens of millions(or even hundreds of millions) of profit each year...what has happened to all the money. I can`t imagine that they are spending billions of dollars, operating hundreds of ships and then have not enough profit to survive such a crisis ?

[njhorseman]

4 hours ago, CruiseMH said:

Without reading all the financial reports and statistics for me it is absolutely unimaginable that the big cruise lines don`t have enough money to be able to survive such a crisis.

Yes, there are up to six months with almost no income.But at the same time their costs are reducing heavily as well.(almost no fuel, reduced salaries for the employees, no port fees and so on) They must have made dozens of millions(or even hundreds of millions) of profit each year...what has happened to all the money. I can`t imagine that they are spending billions of dollars, operating hundreds of ships and then have not enough profit to survive such a crisis ?

Yes, you obviously haven't read the financial reports and probably you don't know much if anything at all about the finances of the major cruise lines.

 

What you said couldn't be further from the truth. The major cruise lines have huge short and long term debt obligations arising from the cost of building all those billion dollar cruise ships. With no money coming in the door in the not too distant future they won't have the cash to pay those loans. In fact not only is money not coming in the door, it's flowing out the door in torrents to passengers who had their cruises cancelled and do not want to take the Future Cruise Credit offers.

'

The cruise lines haven't kept their profits on hand as a rainy day fund, they spend the money to build ships and to buy back their own stock. If you don't already know, you can do an internet search to learn why companies buy their stock back.

 

Oh...the cruise lines don't pay for port fees, employee salaries, fuel, etc. The passengers pay it as part of their fare. The same is true for any business. The end consumer is the one who actually pays all the expenses through their purchase of the goods or services from the business.

[Chesneygirl]

Interesting read about what Carnival is planning on doing with some of their ships. I'm sure NCL and RCL will be doing the same.

 https://thepointsguy.com/news/cruise-lines-could-store-ships-months-coronavirus/?utm_content=E3163F84-752C-11EA-854F-69D896E8478F&utm_source=facebook&utm_campaign=facebook&utm_medium=social&utm_term=Editorial&fbclid=IwAR3JdT6pq26Odo4imzvFhUdsahKGXLEus4l4lQWjYM-TY35_845bSTFE_HM

[ColeThornton]

5 minutes ago, Chesneygirl said:

Interesting read about what Carnival is planning on doing with some of their ships. I'm sure NCL and RCL will be doing the same.

 https://thepointsguy.com/news/cruise-lines-could-store-ships-months-coronavirus/?utm_content=E3163F84-752C-11EA-854F-69D896E8478F&utm_source=facebook&utm_campaign=facebook&utm_medium=social&utm_term=Editorial&fbclid=IwAR3JdT6pq26Odo4imzvFhUdsahKGXLEus4l4lQWjYM-TY35_845bSTFE_HM

 

"With its ships no longer sailing, Carnival Corp. is burning through about $1 billion a month, according to the filing."

 

Ouch. 

[Newleno]

5 hours ago, CruiseMH said:

Without reading all the financial reports and statistics for me it is absolutely unimaginable that the big cruise lines don`t have enough money to be able to survive such a crisis.

Yes, there are up to six months with almost no income.But at the same time their costs are reducing heavily as well.(almost no fuel, reduced salaries for the employees, no port fees and so on) They must have made dozens of millions(or even hundreds of millions) of profit each year...what has happened to all the money. I can`t imagine that they are spending billions of dollars, operating hundreds of ships and then have not enough profit to survive such a crisis ?

I cant speak for all companies but many play it like follow the leader, do as others do.  Stock buy backs have been a huge corporate policy in the usa the last fews years.  So instead of having cash on the books for a rainy day (aka microsoft) they spent all their money on stock buy backs, billions.  so no rainy day fund.   I saw the United Airlines CEO was still defending his position of stock buy backs even though the only way they can survive is a government bailout.  If they would have saved some cash they might have weathered the storm.  however As we know though a CAT 5 hurricane, well most areas not much you can do.  

[njhorseman]

53 minutes ago, Chesneygirl said:

Interesting read about what Carnival is planning on doing with some of their ships. I'm sure NCL and RCL will be doing the same.

 https://thepointsguy.com/news/cruise-lines-could-store-ships-months-coronavirus/?utm_content=E3163F84-752C-11EA-854F-69D896E8478F&utm_source=facebook&utm_campaign=facebook&utm_medium=social&utm_term=Editorial&fbclid=IwAR3JdT6pq26Odo4imzvFhUdsahKGXLEus4l4lQWjYM-TY35_845bSTFE_HM

It makes sense. Minimize your expenses during a prolonged shutdown while maintaining a small number of ships that will be ready to resume cruising on short notice when it becomes possible to do so.

[GlamorousGirl]

A lot of companies file bankruptcy and then are able to continue business as usual. Caesars Entertainment has been in bankruptcy for a while now. Filing bankruptcy and going out of business are not the same thing. I would assume my cruises would depart as planned.

[njhorseman]

13 hours ago, GlamorousGirl said:

A lot of companies file bankruptcy and then are able to continue business as usual. Caesars Entertainment has been in bankruptcy for a while now. Filing bankruptcy and going out of business are not the same thing. I would assume my cruises would depart as planned.

I wouldn't assume that. A  Chapter 11 restructuring could very well result in a smaller fleet. Caesars Entertainment closed some of its less famous and glamorous hotels.

If you had a reservation at one of those hotels that closed you didn't have thousands of dollars prepaid to secure your reservation. You have thousands of dollars prepaid to secure your cruise reservation.