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Solvency of Cruise Lines


Steve Q
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I agree that cruise lines should not be bailed out; however, I think the impact is high on port cities such as Miami, Ft Lauderdale, Galveston, New Orleans, and to an extent Seattle, New York, Los Angeles, and the state of Alaska.  There are tens of thousands that work in those port cities supporting cruise ships that are not employed by the cruise lines.

 

Marc

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1 minute ago, mrlevin said:

I agree that cruise lines should not be bailed out; however, I think the impact is high on port cities such as Miami, Ft Lauderdale, Galveston, New Orleans, and to an extent Seattle, New York, Los Angeles, and the state of Alaska.  There are tens of thousands that work in those port cities supporting cruise ships that are not employed by the cruise lines.

 

Marc

So no bail out and all these people are out of jobs.Not sure of the logic. And Alaska is only to an extent?

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1 minute ago, CBWIR said:

So no bail out and all these people are out of jobs.Not sure of the logic. And Alaska is only to an extent?

 

I guess I don't have perfect logic.  I just can't see giving money to foreign corporations.  Loans, yes.  If states want to reduce port fees, yes.  But I don't think anything should go to the  balance sheet of the cruise companies that is not tied to specific performance metrics that will improve the lot of the American people. 

 

Marc

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4 minutes ago, CBWIR said:

So no bail out and all these people are out of jobs.Not sure of the logic. And Alaska is only to an extent?

Yes, it would be a shame for the thousands of people being impacted however these are foreign companies and while there are many other foreign companies with thousands of employees in the US so should we give money to Mercedes, BMW, Siemens, etc.  Don't believe foreign governments are going to provide money to true US companies with thousands of employees in other than the US.  We are the US but, we have to look inside our country first and spend our money here in the US for US citizens and  legal residents and not on illegal aliens and foreign businesses.  

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1 minute ago, mrlevin said:

 

I guess I don't have perfect logic.  I just can't see giving money to foreign corporations.  Loans, yes.  If states want to reduce port fees, yes.  But I don't think anything should go to the  balance sheet of the cruise companies that is not tied to specific performance metrics that will improve the lot of the American people. 

 

Marc

You do realize that they are subject to U.S.tax on parts of their income and they do take advantage of the IRS code exemption on "shipping income"(Section 883 of the Code) which is available to U.S.companies.as well. So they may be registered in foreign countries, they are still subject to U.S.taxes. Just read the NCHL 10-K.

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11 minutes ago, mrlevin said:

 

I guess I don't have perfect logic.  I just can't see giving money to foreign corporations.  Loans, yes.  If states want to reduce port fees, yes.  But I don't think anything should go to the  balance sheet of the cruise companies that is not tied to specific performance metrics that will improve the lot of the American people. 

 

Marc

Couldnt agree more. And I realize this is a cruise forum, but frankly as of today I'm more concerned about the millions of small  businesses throughout the USA that have been ordered by the government to in essence shutdown with no relief in the horizon. They dont have high priced lobbyists like CLIA has . Many of those businesses will be GONE if this continues for some more weeks. Frankly, the cruise industry doesnt rate up there in my list of concerns although of course some people in this country connected to that industry will be affected. 

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18 minutes ago, cruiseluv said:

Couldnt agree more. And I realize this is a cruise forum, but frankly as of today I'm more concerned about the millions of small  businesses throughout the USA that have been ordered by the government to in essence shutdown with no relief in the horizon. They dont have high priced lobbyists like CLIA has . Many of those businesses will be GONE if this continues for some more weeks. Frankly, the cruise industry doesnt rate up there in my list of concerns although of course some people in this country connected to that industry will be affected. 

I think he changed his mind. See post #51. BTW there are currently two posts #51 don't understand how that happens but referring to the Marx's post about excellent companies and student debt.

Edited by CBWIR
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43 minutes ago, mrlevin said:

Maria, I like your thought process; would love to have dinner on our next cruise;; do you have a totem cruise booked?

 

Marc

No Marc, as of tomorrow I will have no cruises booked, but lets stay in touch, hopefully we'll rebook in the near future. I just wanted to start with a clean slate

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See the link below. It would appear that no financial aid for cruise lines was included in the current stimulus bill. It is certainly possible that relief could be coming in a future bill.

 

https://www.cnbc.com/2020/03/26/coronavirus-bailout-could-exclude-carnival-norwegian-royal-caribbean-cruise-lines.html?&qsearchterm=cruise lines

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Steve, 

 

I believe you are correct in that the requirements for US connection in the current relief bill are conjunctive (repeated use of the  word “and” in the bill’s language) and the major cruise lines just don’t qualify under the language. Of course, neither do any of the international car makers or other international companies if incorporated elsewhere. 

Edited by Dolebludger
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As an avid cruiser,  for the health of the industry, I wish the lines had received some relief. But I also understand why they didn’t, and wonder now about their labor practices. They’re incorporated in other countries to reduce costs, which include paying low wages for monumentally long hours, and expect passengers to make up some of the shortfall by asking us to pay required gratuities. Even a high gratuity rate, and I always try to exceed what the lines recommend, and even give cash to various crew members who’ve gone above and beyond, doesn’t really get the wage up to a decent level. In a way, it’s kind of a shell game, no?

 

I’m certainly aware of the fact that a job on a cruise line offers an opportunity for income that might not be available at many of the crews’ home countries. But still. And of course many lines like Regent promote from within, create a decent working environment, foster loyalty over the years, etc. etc. But still. At the end of the day, a cruise line is a business, not a family. 
 

Frankly, I’m torn and unsure what to think. Does anyone else have a take on this?
 

 

Edited by BarbarianPaul
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Nobody knows what to think about the future of the cruise lines. We can probably safely say that exclusion from the bail out bill increases their risk of bankruptcy in the not too distant future. Everybody probably evaluates that risk differently, but all probably agree that the risk has increased to some degree. What this means to many cruisers is that any money paid to a line for a cruise in the future risks the loss of at least some of that money, if bankruptcy were to occur between the time of that cruise and its conclusion. How much I don’t know. When I practiced in bankruptcy law some 30 to 35 years ago, customers who had paid a bankrupt company money before the bankruptcy and the service and/or goods were not delivered yet had a “super priority” claim up to $2500, that took precedent over virtually all other claimants. The law has probably changed since then, and if anybody here has current info, it would help if they would post it right here! I also don’t know if FCCs would be covered by this claim priority, or not. If anybody has an educated opinion on this, It would also be a good thing for us to know.

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7 minutes ago, Pcardad said:

They all have about 12 months operating capital and will be sailing by July or August....that's my free opinion. In the meantime, ride the cruise stock rollercoaster and make some extra cruise money.

Or try to catch a falling knife and lose what you invested. That’s my free opinion.

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Those who already have their retirement portfolio in place, geared for relative stability and income even in these times, are more interested in the financial stability of cruise lines from the standpoint of booking a cruise on one. There is considerable risk in making deposit payments (or worse, final payment) to a cruise line that may go bankrupt before the ending of the cruise. As I posted above, decades ago the bankruptcy code provided one of the highest priorities to customers who had paid the debtor for things not provided due to the bankruptcy — but only up to $2500.  I wish I knew what the bankruptcy code provided today in this regard. I am too long retired to have any idea. Again, does anybody here know?

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1 hour ago, Pcardad said:

They all have about 12 months operating capital and will be sailing by July or August....that's my free opinion. In the meantime, ride the cruise stock rollercoaster and make some extra cruise money.

 

I like your 12 month estimate vs. the five-six month estimates that I've seen.   

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