Well that puts pay to cruises in May 2020

[Mrdodgy]

Just announced in UK that TUI have cancelled all Marella cruises until June this year.

 

I am sure this is the thin end of the wedge and we will now see the rest of the Cruise industry fall in behind them. Who will be left after this. NCL have drawn their entire credit line and the Epic is now mortgaged up to the smoke stacks!! Lets wish them all well - a world with no cruise lines is not an option but a massive consolidation is coming

[G-DawgMN]

20 minutes ago, Mrdodgy said:

Just announced in UK that TUI have cancelled all Marella cruises until June this year.

 

I am sure this is the thin end of the wedge and we will now see the rest of the Cruise industry fall in behind them. Who will be left after this. NCL have drawn their entire credit line and the Epic is now mortgaged up to the smoke stacks!! Lets wish them all well - a world with no cruise lines is not an option but a massive consolidation is coming

 

 What are you sources on the current NCL financials?

[Mrdodgy]

NCL investors page and public press releases to the SEC. Nothing in my post is other than public information and even on their own website. You need to be able to read them and understand what they mean - but a junior analyst would know this is not great news!! I am only guessing but Project Leonardo will be deferred or even canned and the loan already refinance and repaid. I make it clear this is an assertion which is a pure guess if I was on the board. They will have better over view of the repayments and lack of new revenues at this time . The FCC are costing them a fortune!

 

I hope I am wrong about the cruise restart date for your sake.

Edited April 8, 2020 by Mrdodgy

[G-DawgMN]

26 minutes ago, Mrdodgy said:

I hope I am wrong about the cruise restart date for your sake.

 

 I have zero illusions that my May trip will happen. I'm well aware that they're spacing out the cancellations to prevent a single massive wave of refunds that would probably knock them into bankruptcy.

 

[Mrdodgy]

Exactly - 

Just now, KSSS2013 said:

 

 I have zero illusions that my May trip will happen. I'm well aware that they're spacing out the cancellations to prevent a single massive wave of refunds that would probably knock them into bankruptcy.

 

Exactly - that's why the announcements are a month at a time - There are lots of people think it because they know they will commence in Mid May this year 

[vince_g]

The news about NCL taking a new credit line using Epic as security is probably 2-3 weeks old.

[tgloersen]

I know my June AK cruise will not happen, but actually worried now about my November Panama Canal cruise now.

 

[phillyguy31]

As far as opening their line of credit against the Epic, as far as I know no one on the outside knows how much of a draw they have taken yet. NCL like all the lines are preparing for cash if and when they need it. The FCC isn't costing them anything because it is money they don't have to refund. When the FCC are going to hit is when the cruises happen when the FCC were used against. I am under no illusion that this is not a pretty picture for the cruise line, but there is billions of dollars sitting in the water right now and I don't believe that they would be left just to rust. This industry whether some agree or not is a valuable part of the world economy, people need to vacation or holiday or whatever you want to call it and we all have our choice on how we spend it. So instead of hoping for bankruptcy let's all pray all they companies get through this there is a lot of people who depend on these ships for jobs.

[Georgia_Peaches]

9 minutes ago, phillyguy31 said:

So instead of hoping for bankruptcy let's all pray all they companies get through this there is a lot of people who depend on these ships for jobs.

Finally a sentiment I can get behind!  Thank you!  

[Mrdodgy]

27 minutes ago, phillyguy31 said:

As far as opening their line of credit against the Epic, as far as I know no one on the outside knows how much of a draw they have taken yet. NCL like all the lines are preparing for cash if and when they need it. The FCC isn't costing them anything because it is money they don't have to refund. When the FCC are going to hit is when the cruises happen when the FCC were used against. I am under no illusion that this is not a pretty picture for the cruise line, but there is billions of dollars sitting in the water right now and I don't believe that they would be left just to rust. This industry whether some agree or not is a valuable part of the world economy, people need to vacation or holiday or whatever you want to call it and we all have our choice on how we spend it. So instead of hoping for bankruptcy let's all pray all they companies get through this there is a lot of people who depend on these ships for jobs.

The amount taken is of course oldish news. Agreed But hen they took it they thought they would be operating sooner. Like the other lines they are burning cash very quickly. Everyone forgets the ship board revenue that is also being lost 

 

Its in the statement the amount drawn is the maximum. The FCC is costing thm now as rebooked cruises are taking new revenue places. What I can tell you is whilst they will not be left to rust of course you are correct, there are going to be casualties of fleet reductions postponed projects. There will refits extended and ships could be mothballed. 

 

As to bankruptcy only the current Boards know the answers and some soon to be rich liquidators - hopefully not but inevitable

 

The industry we love will change probably forever. 

 

Do I have inside knowledge - No But after many years in the finance world when credit card companies withhold funds to companies the smell is not grat!

[Mrdodgy]

25 minutes ago, Georgia_Peaches said:

Finally a sentiment I can get behind!  Thank you!  

I would love to but the clouds are gathering over the industry and what I do know is that cash in running out.

 

I have analysed the accounts and can work out to an extent the normal cash burn rate and loan repayments. The latter alone without refinancing will take NCL out they are too heavily geared.

[ray98]

30 minutes ago, Mrdodgy said:

The FCC is costing thm now as rebooked cruises are taking new revenue places.

 

That is being ignored by many.  Sure, issuing a FCC keeps you from using cash for a refund but when the industry opens back up it will also take a slot away from what would be new revenue.  They will be providing a service for revenue that was likely already spent.

[Mrdodgy]

23 minutes ago, ray98 said:

 

That is being ignored by many.  Sure, issuing a FCC keeps you from using cash for a refund but when the industry opens back up it will also take a slot away from what would be new revenue.  They will be providing a service for revenue that was likely already spent.

Absolutely. And the more cruises that get cancelled the more FCC. So effectively they now have lost revenue for x weeks times x ships and then lost it again when people use the FCC!!! plus perks. What a mess!!! 

[ray98]

48 minutes ago, Mrdodgy said:

Absolutely. And the more cruises that get cancelled the more FCC. So effectively they now have lost revenue for x weeks times x ships and then lost it again when people use the FCC!!! plus perks. What a mess!!! 

 

Yup.....imagine a cruise where the vast majority of passengers are onboard from a FCC with OBC covering a good portion of their onboard spending.  I could see those trips racking up massive losses.

[GA Dave]

1 hour ago, Mrdodgy said:

Absolutely. And the more cruises that get cancelled the more FCC. So effectively they now have lost revenue for x weeks times x ships and then lost it again when people use the FCC!!! plus perks. What a mess!!! 

This is the same reason why so many companies now do not allow employees to carry over paid time off year after year.  It is an outstanding liability that has to eventually be paid and impacts the financial health of the company both now and in the future.  The same is true of why pensions are being replaced by 401k’s.  Pensions are an unknown future liability, while 401k matches are just a weekly, bi-weekly or monthly expense, with no future liability.

[CruiseMH]

The losses the cruise lines are now making they cannot get back. They can try to move them to a later time(by giving FCC instead of cash) but the losses will remain. They can only buy some time to find a solution to cover the losses or to spread them over a very long time span.

 

[disneykins]

 I think the cruise lines are just doing whatever it takes to get through next week, then next month, then the next month. Keep pushing their expenses out further and hope to survive. When these FCCs are used the customer is going to view it as a free cruise and maybe, probably spend more on board. Maybe take the beverage package when they might not normally take it. They need to lower price on future cruises and get us to book them now with cash not FCCs or CNDs. That would get some cash coming in to maybe get them to the next bill payment.

Just an idea, but couldn't they re-flag to US registration and pay US taxes from now on. Then they could get a bailout.  Of course they'll be reporting losses for years so they can avoid taxation that way, cant they?

[Mrdodgy]

14 hours ago, ray98 said:

9 hours ago, disneykins said:

 I think the cruise lines are just doing whatever it takes to get through next week, then next month, then the next month. Keep pushing their expenses out further and hope to survive. When these FCCs are used the customer is going to view it as a free cruise and maybe, probably spend more on board. Maybe take the beverage package when they might not normally take it. They need to lower price on future cruises and get us to book them now with cash not FCCs or CNDs. That would get some cash coming in to maybe get them to the next bill payment.

Just an idea, but couldn't they re-flag to US registration and pay US taxes from now on. Then they could get a bailout.  Of course they'll be reporting losses for years so they can avoid taxation that way, cant they?

Yup.....imagine a cruise where the vast majority of passengers are onboard from a FCC with OBC covering a good portion of their onboard spending.  I could see those trips racking up massive losses.

 

14 hours ago, ray98 said:

 

Yup.....imagine a cruise where the vast majority of passengers are onboard from a FCC with OBC covering a good portion of their onboard spending.  I could see those trips racking up massive losses.

Nice idea but to reflag a ship is a huge job and to reflag a fleet near on impossible at this time. also the accumulated trading losses would I suggest no be able to be brought forward to set against US tax. As I say they can not get money from CC companies as they are worried about clawback claims. The only positive issue is once the industry re opens there il be a lot of cash from credit card companies flowing in at first I suspect