SS/RCCL Finances: Improving, Options, Questions??!!

[Randyk47]

https://www.marketwatch.com/story/royal-caribbean-to-sell-its-azamara-brand-for-201-mln-to-sycamore-partners-2021-01-19  Actually not surprised.   I had always wondered why would RCCL keep Azamara after it acquired Silversea.  

[TLCOhio]

On 1/17/2021 at 5:39 PM, CruiserFromMaine said:

Welcome back, Terry! I appreciate your thoughtful posts. 

 

Appreciate these very kind, earlier comments and follow-ups from Mr. Banjo, Silver Spectre and CruiserFromMaine  Nice!!

 

Very good, quick eye by Randy about the re-shifting in corporate strategy by Royal Caribbean. Agree with Randy that this makes sense (and cents).  This effort also says much about the challenged future ahead for cruising!!  

 

From the Wall Street Journal this morning, they had this headline: “Royal Caribbean to Sell Azamara Luxury Cruise Line for $201 Million" with this sub-head: "Cruise operator says it seeks to focus on core brands as it works to resume operations that had been halted due to Covid-19”.

 

Here are more WSJ story highlights: “The divestment is the latest downsizing move by a cruise company during the Covid-19 pandemic as operators look for additional sources of cash. Royal Caribbean Finance Chief Jason Liberty said the deal wasn’t driven by financial reasons and that it had considered selling the brand before the health crisis.  The company will seek to expand its core Royal Caribbean International, Celebrity Cruises and Silversea brands after the sale, Sycamore will acquire Azamara’s three ships and intellectual property such as the brand’s logo and slogan.  Royal Caribbean in December said it sold two ships in its Royal Caribbean International fleet. The company will come out of the deal with three fewer ships than its 61-ship fleet in 2019 after taking two ship deliveries and exiting a joint venture for Pullmantur Cruceros.  'It allows us to really prioritize our resources, which are not just financial resources—it’s also the minds and time of management,' Mr. Liberty told The Wall Street Journal.  Azamara, established by Royal Caribbean in 2007, represents about 1.5% of its capacity and is the smallest among the company’s brands.”

 

Full story at:

https://www.wsj.com/articles/royal-caribbean-to-sell-azamara-luxury-cruise-line-for-201-million-11611063900

 

THANKS!  Enjoy!  Terry in Ohio

 

Panama Canal? Early 2017, Fort Lauderdale to San Francisco adventure through Panama Canal.  Our first stops in Colombia, Central America and Mexico, plus added time in the great Golden Gate City. Now at 30,361 views.

http://boards.cruisecritic.com/showthread.php?t=2465580

Edited January 19, 2021 by TLCOhio

[rucrazy]

13 minutes ago, TLCOhio said:

“Royal Caribbean to Sell Azamara Luxury Cruise Line for $201 Million" with this sub-head: "Cruise operator says it seeks to focus on core brands as it works to resume operations that had been halted due to Covid-19”.

I feel RCI never could get Azamara to the point/level they wanted/envisioned and now that they have aquired SS .. liquidating/selling Azamara makes great sense IMHO

 

Joseph

[Silver Spectre]

2 hours ago, rucrazy said:

I feel RCI never could get Azamara to the point/level they wanted/envisioned and now that they have aquired SS .. liquidating/selling Azamara makes great sense IMHO

 

Joseph

That was probably on the cards when RCI acquired SS and the pandemic has just brought the decision forward. IMHO there was never going to be any synergy between the Azamara followers and SS, and yes we have had some experience.

 

I wonder if Regent has missed a trick though. They could have picked up some more ‘R’ ships on the cheap.

Edited January 19, 2021 by Silver Spectre

[Host Jazzbeau]

59 minutes ago, Silver Spectre said:

That was probably on the cards when RCI acquired SS and the pandemic has just brought the decision forward. IMHO there was never going to be any synergy between the Azamara followers and SS, and yes we have had some experience.

I've been saying this ever since RCG bought Silversea, and especially since they posted that chart showing Royal, Celebrity and Silversea in the 'modern' categories and Azamara below the line [literally] in the 'traditional' category.  It was clearly out of step with their focus.

 

$201 million isn't a lot, but it stops future cash-flow from Azamara and can be used to help pay for the Silversea new-builds.

 

59 minutes ago, Silver Spectre said:

I wonder if Regent has missed a trick though. They could have picked up some more ‘R’ ships on the cheap.

Oceania is moving past the R-ships.  They have two new-builds from 2011-12 ['O-class'] and are building the first of the next class ['Allura-class'] for 2022 delivery.  I suspect they will begin selling off their R-ships as more A-class ships come on line.

[jollyjones]

Ah, the R ships. 
A good size and great in their day, and I’ve enjoyed sailing on them in the past, but the cabin bathrooms!! So tiny, once I’d seen SS bathrooms, I couldn’t go back to an R ship. 

Edited January 19, 2021 by jollyjones

[Host Jazzbeau]

1 hour ago, jollyjones said:

Ah, the R ships. 
A good size and great in their day, and I’ve enjoyed sailing on them in the past, but the cabin bathrooms!! So tiny, once I’d seen SS bathrooms, I couldn’t go back to an R ship. 

The R ships were revolutionary in their day, so it's odd that in one area [cabin size] they were a big step back.  The R ships were the second generation commission by Renaissance.  Ten years before they had built 8 identical 'Roman Numeral' ships – three of which are still sailing for Noble Caledonia – with no inside cabins and the smallest cabin size was 21 sq m [226 sq ft]

[TLCOhio]

2 hours ago, jollyjones said:

Ah, the R ships. A good size and great in their day, and I’ve enjoyed sailing on them in the past, but the cabin bathrooms!!  So tiny, once I’d seen SS bathrooms, I couldn’t go back to an R ship. 

 

YES!!  Interesting series of comments and memories regarding the R-Class ships.  With Oceania, we have sailed on two different, somewhat long R-Class ship sailings.  Nautica, late 2018, 20-days, Athens to Dubai.  Re-done Regatta, early 2020, 18-days, New Zealand to Bora Bora and Tahiti.  Agree that there are many solid, classy aspects connected with these ships.  BUT, the basic room/balcony is fairly small,  Especially in the bathroom!!

 

My joke is that in these small showers is that it might be easier to just put the liquid soap on the wall and, then, merely rotate around your body against the narrow walls.  Would that be easier??

 

Both of these R-Class ship sailings, like with Silversea, were more "personal" with better, more interesting itineraries/port stops.  

 

THANKS!  Enjoy!  Terry in Ohio

 

From late 2018, see “Holy Lands, Egypt, Jordan, Oman, Dubai, Greece, etc.”, on the Oceania Regatta with many visuals, details and ideas for the historic and scenic Middle East. Now at 19,339 views.  Connect at:

www.boards.cruisecritic.com/topic/2607054-livenautica-greece-holy-lands-egypt-dubai-terrypix’s/

 

Here is some R-Class "evidence" to verify that the regular balcony baths are very small. The re-done Regatta now has glass for the shower versus the previous plastic curtain.  Glass is better, but small is still tiny!!??:

(Open your screen/viewer wider to see this visual larger/better!)

[Host Jazzbeau]

Since we're comparing to Silversea and Silversea prices, you could upgrade to an Azamara Club Suite and have something more comparable [266 sq ft cabin area + 60 sq ft veranda; bathroom has either full-size tub or tub-size shower].  That also gets you free dining in the specialty restaurants.

[Stumblefoot]

6 hours ago, TLCOhio said:

Here is some R-Class "evidence" to verify that the regular balcony baths are very small.

My goodness, I’ve seen bigger bathrooms on jet airplanes!

[cruiseej]

The sale price is interesting. $210 million for three ships, the brand, and staff seems really cheap -- which is undoubtedly a sign of the times. Just to put that in perspective, the price tag for the new Silversea ship Silver Dawn is estimated to be about $380 million -- almost twice as much as the sale price of the entire Azamara cruise line!

 

The buyer is also somewhat interesting. Sycamore Partners is a small private equity firm with holdings in the retail sector (including Talbots and 9 West) -- but nothing in travel. It will be interesting to see if they acquire any other pieces while cruise lines are hemorrhaging money and looking to dump assets for cash, to build a larger stake in the travel business. A 3-ship stand-alone cruise line coming out of a global pandemic that halted cruising seems like a tough business to build; I'm thinking there might be other acquisitions which will follow.

[Host Jazzbeau]

Travel Weekly's UK website has a long article – and an even longer video interview with Carol Cabezas, President of the new Azamara – that gives a lot more detail about Sycamore's plans.  They do plan to invest heavily in expanding Azamara.

https://travelweekly.co.uk/articles/399076/new-azamara-owners-plan-to-add-more-ships-to-fleet

 

[BTW I couldn't get the video to play using Safari or Firefox, but it did play using Chrome]

[TLCOhio]

4 hours ago, Host Jazzbeau said:

Travel Weekly's UK website has a long article – and an even longer video interview with Carol Cabezas, President of the new Azamara – that gives a lot more detail about Sycamore's plans.  They do plan to invest heavily in expanding Azamara.

https://travelweekly.co.uk/articles/399076/new-azamara-owners-plan-to-add-more-ships-to-fleet

[BTW I couldn't get the video to play using Safari or Firefox, but it did play using Chrome]

 

Appreciate this interesting story and link.  I was able to view the video, but it was a little tangled to connected.  From the new head of Azamara, my two key "take-aways" were that they both want to add more ship . . . AND . . . provide more in the land-based tours, etc.  Will that work and attract a wider customer base?  Given that this owner is more about running and trying to re-build challenged retail stores, I would be doubtful in this current environment that this plan has been careful constructed for future success.  Am I being too cynical and not trusting enough??

 

THANKS!  Enjoy!  Terry in Ohio

 

PS: Super cute comment from Stumblefoot about "My goodness, I’ve seen bigger bathrooms on jet airplanes".

 

Barcelona/Med: June 2011, with stops in Villefranche, ports near Pisa and Rome, Naples, Kotor, Venice and Dubrovnik. Great visuals with key highlights, tips, etc. Live/blog now at 252,748 views.

www.boards.cruisecritic.com/showthread.php?t=1426474

[mrlevin]

6 hours ago, Host Jazzbeau said:

Travel Weekly's UK website has a long article – and an even longer video interview with Carol Cabezas, President of the new Azamara – that gives a lot more detail about Sycamore's plans.  They do plan to invest heavily in expanding Azamara.

https://travelweekly.co.uk/articles/399076/new-azamara-owners-plan-to-add-more-ships-to-fleet

 

[BTW I couldn't get the video to play using Safari or Firefox, but it did play using Chrome]

 

Jazz, thanks; I guess I know where the Oceania "R" ships are heading. 😄

[Host Jazzbeau]

51 minutes ago, mrlevin said:

Jazz, thanks; I guess I know where the Oceania "R" ships are heading. 😄

Well, 'coincidentally' CCL announced today that they have sold their last remaining R-ship [Pacific Princess] to an 'undisclosed buyer.'  I don't think I'm going out on a limb when I connect those dots...

[Host Jazzbeau]

2 hours ago, TLCOhio said:

 

Appreciate this interesting story and link.  I was able to view the video, but it was a little tangled to connected.  From the new head of Azamara, my two key "take-aways" were that they both want to add more ship . . . AND . . . provide more in the land-based tours, etc.  Will that work and attract a wider customer base?  Given that this owner is more about running and trying to re-build challenged retail stores, I would be doubtful in this current environment that this plan has been careful constructed for future success.  Am I being too cynical and not trusting enough??

 

THANKS!  Enjoy!  Terry in Ohio

 

PS: Super cute comment from Stumblefoot about "My goodness, I’ve seen bigger bathrooms on jet airplanes".

 

Some days I think that one can never be cynical and distrustful enough, but not on this occasion.  I know that Sycamore has a reputation as a private-equity vulture, but they also apparently have had some success stories where they enhance a brand and then sell it off at a profit – I believe that is the goal here.  This isn't a terribly run business with a lot of real estate or other equity that can be sold off.  $201 million for three ships is still far more than the scrap value, plus they are walking into several more months of massive cash flow without revenue – so a strip and dump operation would be doomed to fail. 

 

OTOH $201 million is cheap for three ships in such excellent condition [Windstar just spent over $250 million refurbishing three ships that they already own], plus  a going concern staffed with excellent people, a full schedule of enticing itineraries, lots of future bookings.

 

So I'm inclined to trust the promises that Sycamore is planning to invest even more in this brand to expand its market share – then I believe they hope to sell it or IPO to reap a huge profit.  And I think they can – RCG has always starved Azamara of capital, but look what Oceania was able to do in the similar timeframe even without NCL's capital reserves.

 

Finally, I think that Azamara's country-immersive itineraries plus the land extensions [which is a program that was put in place by the existing management in 2019 but put on hold by Covid just as it was launching] gives them a unique market niche.  Viking Ocean has newer, more spacious ships – but their itineraries are same old–same old.  Oceania has two newer ships (not so new any more) and two even fancier ones on order – but they have never had the destination focus that Azamara has. 

 

If Sycamore also pays for a bigger ad budget, I think Azamara can succeed very well.  But as our friend on the Crystal forum says, 'Time will tell.'

 

PS – I have sailed on R-ships on both Oceania (inside cabin) and Azamara (veranda and suite).  The regular cabins are small but well laid out so they don't feel oppressive; their bathrooms are small, but the only really bad feature is the shower.  Upgrading to a Club Continent suite gets you a more spacious cabin and – most importantly – a nice bathroom with your choice of a full-size bathtub or a bathtub-size shower.

[TLCOhio]

On 1/21/2021 at 7:49 PM, Host Jazzbeau said:

Some days I think that one can never be cynical and distrustful enough, but not on this occasion.  I know that Sycamore has a reputation as a private-equity vulture, but they also apparently have had some success stories where they enhance a brand and then sell it off at a profit – I believe that is the goal here.  This isn't a terribly run business with a lot of real estate or other equity that can be sold off.  $201 million for three ships is still far more than the scrap value, plus they are walking into several more months of massive cash flow without revenue – so a strip and dump operation would be doomed to fail. 

 

Appreciate these various above comments and follow-ups.  Very good added insights and details from Host Jazzbeau.

 

Below are the latest views/evaluations from the Wall Street financial expertsas to the future values for these three major cruise companies. Something is happening negative this morning.  Not sure what and why!!  

 

Any good guesses and/or speculation??

 

THANKS!  Enjoy!  Terry in Ohio

 

Norway Coast/Fjords/Arctic Circle cruise from Copenhagen, July 2010, to the top of Europe. Scenic visuals with key tips. Live/blog at 241,212 views.

www.boards.cruisecritic.com/showthread.php?t=1227923

 

From the Wall Street Journal this morning, it shows a significant opening value drop for all three major cruise companies during the first 40 minutes of trading.  Plus, as shown, last week was a slow, downward decrease.  Not a positive sign??!!:

(Open your screen/viewer wider to see these visuals larger/better!)

 

 

[jpalbny]

Well, the cruise startup dates keep moving further into late spring/early summer, vaccine roll-out isn't as fast as we had hoped, and the new variants potentially aren't as susceptible to the vaccine... What good news is there for cruiseline stocks in all that?

[TLCOhio]

53 minutes ago, jpalbny said:

Well, the cruise startup dates keep moving further into late spring/early summer, vaccine roll-out isn't as fast as we had hoped, and the new variants potentially aren't as susceptible to the vaccine... What good news is there for cruiseline stocks in all that?

 

Great above summary, comments and follow-up from smart and savvy J.P.  Seems like you nailed it!!.  

 

From the Travel Weekly trade publicaton this morning, they had this headline: “Azamara confirms purchase of Princess Cruises ship” with these highlights: “Azamara’s new owner has confirmed the line has bought Pacific Princess from Princess Cruises, taking its fleet to four vessels.  Princess announced on Friday that the ship, identical to Azamara Journey, Quest and Pursuit, had been sold. Following a full renovation, the ship – which will be renamed – is scheduled to sail its inaugural season in Europe in 2022. The 670-passenger vessel joined the  Princess fleet in 2002, having originally entered service in 1999 as R3 for Renaissance Cruises.”

 

Maybe Azamara could be a future player?  Maybe has a plan?

 

Full story at:

https://www.travelweekly.co.uk/articles/399419/azamara-confirms-purchase-of-princess-cruises-ship

 

THANKS!  Enjoy!  Terry in Ohio

 

Sydney to NZ/Auckland Adventure, live/blog 2014 sampling/details with many exciting visuals and key highlights.  On page 23, post #571, see a complete index for all of the pictures, postings.  Now at 232,162 views.

www.boards.cruisecritic.com/showthread.php?t=1974139

[jpalbny]

Aw, the Pacific Princess was our first R-ship cruise, back in 2007. It was Tahitian Princess way back then. We had the rear-facing owner's suite on deck 6. One of my favorite rooms ever. 6091. We sailed in that same suite 3x on Oceania ships as well.

[zqtchas]

Carnival just cancelled 2021 cruises. Thing don't look good.

[TLCOhio]

2 hours ago, zqtchas said:

Carnival just cancelled 2021 cruises. Thing don't look good.

 

Great follow-up from zqtchas in northern Virginia.  Per below, you might be correct by pointing in the direction of Carnival and their major challenges as driving today's downward slide in values for the three major cruise lines by Wall Street.    

 

From this Internet financial website today, they had this headline: “Why Norwegian Cruise, Carnival Corporation, and Royal Caribbean Stocks All Sank Monday” with these highlights: “Cruise line stocks are tanking as the trading week gets under way. But it's Carnival pulling the whole sector lower.  This morning, the world's biggest publicly traded cruise line announced a new slew of 'ship-specific cruise cancellations and movements.' Among the new developments, three cruise ships -- Carnival Magic, Carnival Paradise, and Carnival Valor -- are going to be laid up in dry dock until November 2021, and cruises aboard these ships that were slated to begin as early as June will now be canceled.  And that's the good news.  Carnival may be the catalyst for today's sell-off, but it's not the only cruise line encountering difficulties. As Barron's noted on Friday, cruises aboard all three major cruise lines are now not expected to resume before the fourth quarter of 2021, or even early 2022.  What does this mean for investors?  Choppy waters, to borrow a phrase. If Truist and Barron's are right, then we seem to be looking at a scenario in which cruise stocks may repeatedly be bid up in anticipation of an approaching end to cruise suspensions, and/or updates on bookings numbers, only to have the rug pulled out from under investors as those cruise suspensions stretch farther and farther back into the calendar year.  Adding to investors' dismay, as cruise lines come to the realization that they won't resume cruising as soon as they had hoped, they may need to issue more stock to raise more cash -- diluting shareholders in the process.  By the time cruising does resume, and Carnival, Norwegian, and Royal Caribbean turn profitable again, those profits may turn out to be a whole lot thinner than investors today expect.”

 

Full story at:

https://www.msn.com/en-us/money/topstocks/why-norwegian-cruise-carnival-corporation-and-royal-caribbean-stocks-all-sank-monday/ar-BB1d4Y1s

 

THANKS!  Enjoy!  Terry in Ohio

 

Venice: Loving It & Why??!!  Is one of your future desires or past favorites? See these many visual samples for its great history and architecture.  This posting is now at 89,482 views.

http://boards.cruisecritic.com/showthread.php?t=1278226

[Stumblefoot]

Thankfully, money remains super cheap and readily available.
 

9 hours ago, jpalbny said:

What good news is there for cruiseline stocks in all that?

 

[philipb]

15 hours ago, Stumblefoot said:

Thankfully, money remains super cheap and readily available.
 

 

 

But unlike governments, there is a limit to how much an ailing business can borrow. This is how I think it could play out:

The re-start of mainstream cruising will continue to be delayed in 2021 to the point where the 'Big 3' cruise companies no longer have sufficient working capital to remain afloat. The 'cash burn' will continue and we could see the big corporations filing for bankruptcy (in whichever jurisdiction they may reside). In this event, the secured lenders will either convert their debt for equity (wiping out existing shareholders in the process) or sell their secured assets (principally the ships) to the private equity investors who will be circling like vultures. Newer ships will survive under new ownership (possibly using existing trading names to retain passenger loyalty) and older tonnage will go for scrap to the beaches of Turkey, India or wherever. The industry will shrink, as a result. As regards newbuilds, the new investors can either renegotiate existing contracts or walk away depending on how the numbers stack up. To be left with a half-built ship is not an attractive proposition for the shipbuilder and so again the new investors will have bargaining power. In all of these scenarios existing shareholders are likely to end up with little or nothing.

 

Terry - you might like to bookmark this post and come back to it on 31 December 2021 and see how much of my analysis has proven correct!

 

[Silver Spectre]

On 1/25/2021 at 6:19 PM, jpalbny said:

Aw, the Pacific Princess was our first R-ship cruise, back in 2007. It was Tahitian Princess way back then. We had the rear-facing owner's suite on deck 6. One of my favorite rooms ever. 6091. We sailed in that same suite 3x on Oceania ships as well.

That was one of our favourite Princess ships as we made the transition to SS. Cabins were a bit small with a negligible shower, but the ships were spacious enough inside to cope with the guest compliment and second sitting was always easy to get into.