Solvency of Cruise Lines

[Dolebludger]

33 minutes ago, Bellaggio Cruisers said:

Who cares what happened 20 years ago?

We do because many times the causes of a company's failure can be traced back a number of years. GM is an example. It made some pretty sorry products in the late 70's and 80's, which was part of the cause of its bankruptcy a couple of decades later. (Not saying that these cruise conglomerate have sorry products. their problem are acquiring too much debt.)

 

[Bellaggio Cruisers]

2 minutes ago, Dolebludger said:

 

Why is this your concern?
Do you have a large chunk of money invested? 
Sheila

[Dolebludger]

We own no stocks or bonds in any of the cruise conglomerates. Our only concern is having a cruise booked at some point in the future and having the line go bankrupt before the cruise after deposit, and perhaps after final payment and airline and hotel bookings. 

[Wendy The Wanderer]

Just now, Dolebludger said:

We own no stocks or bonds in any of the cruise conglomerates. Our only concern is having a cruise booked at some point in the future and having the line go bankrupt before the cruise after deposit, and perhaps after final payment and airline and hotel bookings. 

 

Yes, that's my concern too.  We have a large deposit down for next year's World Cruise.  Final payment is in July.  Right now I can't imagine us not just cancelling.  It seems like the world has changed fundamentally and our "dream trip" will not happen.  Sure glad I don't have any FCC's.

 

What are the chances that Regent will be sailing 'normally' by next January, 2021?  I'm not sure I want to take that bet.

[GrJ Berkshire]

I am only concerned that Regent that we all enjoy survives this year out.

The way things are going you just wonder what will be left after the virus.

The standard market rules of capitalism simply can't work on this situation, especially as so many companies have such enormous debts and no income coming in for a period.

[Bellaggio Cruisers]

Let’s put this into perspective.....We have lost much more money the stock market so far (on paper) than our money at Regent. So, I am more concerned about our money than than the amount we could lose at Regent. 
if the market recovers and RSSC doesn’t, so be it. 
sheila

[wristband]

Agree with Wendy - I am not now comfortable taking the bet.  Should NCL fail - after the full fare is paid - she becomes an unsecured creditor.  Will there be many new bookings from April to Dec. to offset NCL's lost revenues?  Nope. 

 

Cruising has all the appeal of Joe Camel now and will for months to come. Going to take time to change negative perceptions.

 

We expect credit card issuers/banks to promptly refund to card holders.  But: how long it will take to get that refund...esp if the economy continues to crater...how much money did banks advance NCL from cc payments for future cruises...what if NCL argues (as they have) refunds will be only by future cruise credits - not cash?  I would want my money back - not FCF.

 

The cancellation policy on invoices is loosey goosey - cash refunds are not specifically stated nor expressly required.

 

On the other hand, if final payment is due 3 months from now much can change.  For better or worse.

[pdaniel]

“Generally, insiders buying up their corporation's stock is an indication that the stock will recover. Sadly, In don't see that in the cruise industry.”

 

Generally, that is the case and I would agree.  However, FDR and other cruise line executives are currently in negotiations with the Federal government and banks.  If they receive assurances of a bailout and purchase their own stock now, they have serious legal and publicity issues.  I would not expect to see any insider trading activity until there is a clear resolution.

[Pcardad]

I have a number of cruises booked over the next 18 months and I can't wait to get back out there...Obviously no one will be for a while, or however long it take to hit a majority of the population, but I am not afraid to travel.

[GrJ Berkshire]

1 hour ago, pdaniel said:

“Generally, insiders buying up their corporation's stock is an indication that the stock will recover. Sadly, In don't see that in the cruise industry.”

 

Generally, that is the case and I would agree.  However, FDR and other cruise line executives are currently in negotiations with the Federal government and banks.  If they receive assurances of a bailout and purchase their own stock now, they have serious legal and publicity issues.  I would not expect to see any insider trading activity until there is a clear resolution.

Why would the US government bail out cruise lines which are flagged elsewhere?

Not even the current administration will go down this route. This is the problem with ships being under flags of convenience. 

[pingpong1]

7 minutes ago, GrJ Berkshire said:

Why would the US government bail out cruise lines which are flagged elsewhere?

Not even the current administration will go down this route. This is the problem with ships being under flags of convenience. 

When eager and excited Regent cruisers happily plunk down their thousands of dollars, and  come on board the Explorer with smiling faces, all ready to begin their next high-end cruise experience, do you think any of them actually "care" that this ship is "flagged" (registered) in the Marshall Islands?  Probably not, as long as the Miso-glazed sea bass is cooked "to perfection" that night.

[CBWIR]

11 minutes ago, GrJ Berkshire said:

Why would the US government bail out cruise lines which are flagged elsewhere?

Not even the current administration will go down this route. This is the problem with ships being under flags of convenience. 

Perhaps you and the author of the article referenced above should consider  the ripple effect of bankruptcy.

The industry generates airline, hotel and other transportation revenue as a result of its offerings.

Travel agencies many of which are small businesses would suffer greatly.

The amount of promised refunds and future cruise credits is substantial and the majority is owed to U.S.citizens.

Some food for thought?

[Wendy The Wanderer]

2 hours ago, Bellaggio Cruisers said:

Let’s put this into perspective.....We have lost much more money the stock market so far (on paper) than our money at Regent. So, I am more concerned about our money than than the amount we could lose at Regent. 
if the market recovers and RSSC doesn’t, so be it. 
sheila

 

Well Sheila yes, but the stock market will rebound eventually.  Yes, we've lost money, and will perhaps lose in the long-run.  But that makes the loss of $30K even harder to take.

[wristband]

Add: cruise lines do NOT pay US taxes. 

 

Bailing out cruise companies is politically untenable - ships are flagged in Liberia/Panama & operate outside the jurisdiction of US laws, majority of employees are not US citizens and don't pay US or state income taxes, and the companies do not comply with US labor laws. 

 

Despite Mickey Aronson's chummy relationship with Trump, cruise companies are not vital to the well being of the US economy.

[Wendy The Wanderer]

2 minutes ago, CBWIR said:

Travel agencies many of which are small businesses would suffer greatly.

 

Think about all the tour guides and agency in all the countries where we have cruised?  Think of all of those poor people, they will be getting desperate soon.  And TA's as well--I'm betting that my own TA is laying people off as we speak.

[flossie009]

1 hour ago, wristband said:

The cancellation policy on invoices is loosey goosey - cash refunds are not specifically stated nor expressly required.

 

In the UK, the Regent Booking Conditions are very clear regarding pre-departure cancellations by Regent and include the words ".............. we will refund all monies you have paid to us within 14 days of the date we inform you of the cancellation ............ ".

 

Unfortunately all staff members in the Regent UK office seems to be ignoring the clarity of the UK Contract terms and keep quoting that "refunds may take up to 90 days" - presumably this party-line is under the direction of NCLH management in Miami in an attempt to bolster cash-flow over the coming months.

[Pcardad]

It's not a cash-flow issue, these refunds are done manually. 

[Dolebludger]

 

For what little it may be worth, we are factoring into our personal planning the prediction that the cruise lines will NOT be bailed out by the Feds. It is a political matter and therefore unpredictable, of course. But from information available to me (may not be totally accurate) cruise lines pay no Federal taxes, resist any regulation by the Feds, flag all their ships in foreign countries, and their employees are at least 80% foreign nationals. The last matter about the majority of non-US employees is likely to be the greatest deterrent to a Fed bail out. One of the reasons for Fed bail outs of corporations has been to protect jobs of US workers. Now, before I am criticized, I know that there have been good financial reasons for cruise lines to operate as they have, with a "curtain" between them and Federal restrictions. But this makes it improbable that the Feds will bail them out. 

[CBWIR]

47 minutes ago, Dolebludger said:

 

For what little it may be worth, we are factoring into our personal planning the prediction that the cruise lines will NOT be bailed out by the Feds. It is a political matter and therefore unpredictable, of course. But from information available to me (may not be totally accurate) cruise lines pay no Federal taxes, resist any regulation by the Feds, flag all their ships in foreign countries, and their employees are at least 80% foreign nationals. The last matter about the majority of non-US employees is likely to be the greatest deterrent to a Fed bail out. One of the reasons for Fed bail outs of corporations has been to protect jobs of US workers. Now, before I am criticized, I know that there have been good financial reasons for cruise lines to operate as they have, with a "curtain" between them and Federal restrictions. But this makes it improbable that the Feds will bail them out. 

Perhaps you too should consider post #37 above. 

[Dolebludger]

I did consider post #37 above. The effect on airlines from the elimination of a cruise line conglomerate should be minimal. Perhaps it would cause the airlines to stop putting passengers in a "can of sardines". And one of the main reasons that US hotels get cruise business is that our airlines are highly unreliable. In any event, I feel the hotel impact would be minimal and perhaps would cause them to lower their outrageous rates. And most of the hotel impact would affect overseas hotels, not US ones. As for travel agencies, the number of impacted employees would be far less than employees that have been laid off in the restaurant industry. As far as tour guides in other countries (per Post #40 above), well, they are in other countries. 

 

As to FCC held by people in the US, you have a good point. Bankruptcy laws give them a top priority (as services and goods paid for and not delivered). But there is a maximum on the amount of that priority. I don't know what it currently is. Way back it was $2500. It is probably higher now, but not up to the amount of the FCCs Regent has issued. If that is the case, the real solution would be to eliminate the maximum on these top priority bankruptcy claims.

 

Federal bail outs should go to entities of a higher priority than cruise line conglomerates.

Edited March 23, 2020 by Dolebludger

[GrJ Berkshire]

36 minutes ago, CBWIR said:

Perhaps you too should consider post #37 above. 

We in the UK today are now entering total lockdown. Stay at home except in certain circumstances, for instance all places of worship are closed no services, not even open for private prayer. No non-essential shops to remain open.

The TA's will all shut, my super one included, many will not survive this business loss. No income for months, but overheads to pay. Equally Regent will have nobody paying final invoices and no new bookings, but have staff contracts to pay out and mooring costs to meet of all 5 ships.

Worrying  

[CBWIR]

21 minutes ago, Dolebludger said:

 

 

Federal bail outs should go to entities of a higher priority than cruise line conglomerates.

Several minutes ago, Trump mentioned cruise lines in his list of businesses that should be helped. Not the first time he has said it. Respect your opinion as to who should be protected but we will see what happens.

[ronrick1943]

I agree they most likely need help for this, but just maybe they should start registering the ship in the USA and pay US taxes on the profits.

[rallydave]

3 hours ago, wristband said:

Add: cruise lines do NOT pay US taxes. 

 

Bailing out cruise companies is politically untenable - ships are flagged in Liberia/Panama & operate outside the jurisdiction of US laws, majority of employees are not US citizens and don't pay US or state income taxes, and the companies do not comply with US labor laws. 

 

Despite Mickey Aronson's chummy relationship with Trump, cruise companies are not vital to the well being of the US economy.

Add to all of these issues in the fact that none of the cruise lines are US Companies.  In addition to the ships being flagged outside the US the companies themselves are registered in countries like Panama and other off shore countries.  Yes the Headquarters are here in the US  but, not incorporated or registered US Companies.

[cruiseluv]

Everybody has different tolerance to risk.  Even in a best case scenario, cruise lines will not emerge unscathed, and their product may change. I dont like extreme uncertainty ( which the cruise line industry future is currently subject to) and wouldn't want to be in a conga line of creditors, waiting for my refund . Its not only the cruise industry, but frankly the whole economy is teetering given the extreme shutdowns we're experiencing worldwide. So I'll be cancelling my two future cruises and hopefully getting my deposits back in less then 90 days. There'll always be the opportunity to book cruises in the future if the price and quality of the product warrant it.