Time for NCLH financial-related posts?

[greykitty]

Could be worse, I guess - 'going concern' didn't rear its head again this report that I've come across so far, and they have been able to push some debt down the road a bit.   Still the debt load remains concerning to me, given that a good re-start seems further away than ever, given current events.  And hoping they're able to lower their burn rate, although not sure how without putting ships into less than warm layup?  I'm sure I'm missing cost cutting measures

 

"As of August 3, 2020, approximately 60% of the guests who have had their voyages cancelled have requested cash refunds"

...

 

As of June 30, 2020, the Company had $1.2 billion of advanced ticket sales, including the long-term portion, which includes approximately $0.8 billion of future cruise credits. The Company continues to take future bookings and receive new customer deposits and final payments on these bookings.

 

...

 

The Company's targeted monthly cash burn is on average, approximately $160 million per month during the suspension of operations. This includes ongoing ship operating expenses, administrative operating expenses, interest expense, taxes and expected capital expenditures and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings. This also excludes debt amortization and newbuild related payments which are currently deferred through March 31, 2021. The new monthly cash burn estimate is at the high end of the previously disclosed range due to additional interest expense related to the July capital raise, maintaining more ships in warm layup due to various port requirements and weather restrictions, increased costs associated with fluctuating travel restrictions for crew and additional marketing investments

 

 

https://www.benzinga.com/pressreleases/20/08/g16961997/norwegian-cruise-line-holdings-reports-second-quarter-2020-financial-results

[mrlevin]

15 minutes ago, pappy1022 said:

Not unexpected but certainly not good news. We knew they would lose money given the circumstances but the lack of revenue is most concerning since it indicates that most people aren’t booking new cruises with new cash (not FCC’s). I think there are certainly people who will cruise whenever Regent offers it but I also believe that many will take a wait and see attitude before they plunk down serious $’s on a cruise. 

 

They can't book income until the cruise; deposits don't count as income, just cash and equivalent liability.

[rallydave]

11 minutes ago, greykitty said:

As of August 3, 2020, approximately 60% of the guests who have had their voyages cancelled have requested cash refunds"

...

 

As of June 30, 2020, the Company had $1.2 billion of advanced ticket sales, including the long-term portion, which includes approximately $0.8 billion of future cruise credits.

Find this information interesting and telling.  The percentage of people requesting cast refunds has increased from the previous 50% to 60% and fully 2/3's of the advanced sales are from FCC's   Not the cruises are filling up so book now that some posters are touting.

[Pcardad]

Nothing surprised me in this data. But I also think cruising will remain in some form NO MATTER HOW LONG it takes to resume. It is a profitable business model and perhaps only the very high end will survive. I expect to see 1/3 ships cut up before this is over. I think the giant 6500 passenger ships with be a thing of the past. Smaller ships like Navigator might be the future.

Edited August 6, 2020 by Pcardad

[mrlevin]

What surprised me most was that they were able to book $16.9M in revenue.  $13.8M came from "passenger ticket' which is amount of non-refundable deposits or penalties for customer cancelled bookings (obviously there were no sailings in the quarter) but $3.1M came from "other," I imagine that most of this was from selling customer data.

 

Will be interesting to hear the earnings call in a few minutes.

[howiefrommd]

All of these companies  have the metrics as to where they make money and where they do not.  I also believe there will be some survival, but what we knew will never be again.  Wherever the data takes (as far as maximum return) the cruise lines, that is what we will have.  Obviously we will not be able to do it for what prior costs where, but that will be the price we pay to enjoy cruising.  

[mrlevin]

I am hoping to ask the following question:

 

When will Regent Seven Seas Mariner's 2021 World Cruise be cancelled?

 

As there is probably over $30M in deposits for that cruise; it is probably the largest amount of cash NCLH has.

[greykitty]

32 minutes ago, Pcardad said:

Nothing surprised me in this data. But I also think cruising will remain in some form NO MATTER HOW LONG it takes to resume. It is a profitable business model and perhaps only the very high end will survive. I expect to see 1/3 ships cut up before this is over. I think the giant 6500 passenger ships with be a thing of the past. Smaller ships like Navigator might be the future.

Supposedly NCL's new Ninja Turtle (excuse me, Leonardo) ships will be smaller, but not that small.  Harry Sommer says you start losing economies of scale under 2,000. 

 

That said, I've been thinking that very possibly travel cruising may be returning to the pre-Love Boat days, as a true luxury affordable to only the wealthy. Where the ROI breaks, I don't really know.  

 

Also, who knows if any of the new order ships by any line get built, and who will finally take possession.

https://thepointsguy.com/news/norwegian-cruise-line-ordering-smaller-ships/

 

 

 

 

[Pcardad]

5 minutes ago, mrlevin said:

I am hoping to ask the following question:

 

When will Regent Seven Seas Mariner's 2021 World Cruise be cancelled?

 

As there is probably over $30M in deposits for that cruise; it is probably the largest amount of cash NCLH has.

 

End of July cancelled October

End of August will cancel November

End of September will cancel December

End of October will cancel January

 

All guesses of course but it is what I am planning for.

[Pcardad]

3 minutes ago, greykitty said:

Supposedly NCL's new Ninja Turtle (excuse me, Leonardo) ships will be smaller, but not that small.  Harry Sommer says you start losing economies of scale under 2,000. 

 

That said, I've been thinking that very possibly travel cruising may be returning to the pre-Love Boat days, as a true luxury affordable to only the wealthy. Where the ROI breaks, I don't really know.  

 

Also, who knows if any of the new order ships by any line get built, and who will finally take possession.

https://thepointsguy.com/news/norwegian-cruise-line-ordering-smaller-ships/

 

 

 

 

Agreed - I see a world where all the ships are under 1,000 and have twice the room as today.

[Guerncruising]

21 minutes ago, Pcardad said:

Agreed - I see a world where all the ships are under 1,000 and have twice the room as today.

I would vote for that. 

[pappy1022]

21 minutes ago, Pcardad said:

 

End of July cancelled October

End of August will cancel November

End of September will cancel December

End of October will cancel January

 

All guesses of course but it is what I am planning for.

I believe we won’t see a substantial number of cruise lines starting up until spring 2021 at the earliest. The cruise lines didn’t go out and get the amount of financing they did to stay alive if they felt they would be operational this year or early next year.

[Pcardad]

April is a maybe in my book....but it might be fall of 2021 as well. 

 

The cruise lines won't go away....but they might cut half their ships and only run more expensive trips.

[greykitty]

Just now, Pcardad said:

April is a maybe in my book....but it might be fall of 2021 as well. 

 

The cruise lines won't go away....but they might cut half their ships and only run more expensive trips.

Would you expect fares to go up quite a bit to cover both operating and corporate overhead costs, though?  Where today's (or even posted 2021, etc.) fares would look like bargain basement?  I just don't know if I see a cushion to be able to offer fares that don't truly cover all expenses.

[Pcardad]

Worst case? They restructure and dump half their ships and then keep operating.

 

The market will set the prices...but I suspect Regent probably already will make any new SQFT per passenger requirements and will continue on.

 

I think those Carnival cattle car cruises are finished.

Edited August 6, 2020 by Pcardad

[howiefrommd]

Restructure as in voluntary or via Chapter 11 Bankruptcy? 

[rallydave]

Anybody else notice that while all of the cruise lines have cut staff and reduced hours of the worker bees, nothing about cutting the multi-million dollars salary and bonuses of the executives.   Many millions of dollars to save from the executives and a lot more than saved by the office staff? 

[rallydave]

3 minutes ago, howiefrommd said:

Restructure as in voluntary or via Chapter 11 Bankruptcy? 

Anybodies guess and probably different depending on the cruise lines.  Restructure for sure and how depends on the debt and which would cost the cruise line the least.

[howiefrommd]

Can you imagine what the Q3 call will be like if nothing changes.  WOW 

[mrlevin]

Obviously there isn't a reopening plan beyond starting with just a few ships, probably in Caribbean, and "hopefully" in November or December.  

 

They only have around $400M in cash deposits (including final payments) for all cruises currently across all three lines. I still think a large chunk of that is Mariner 2021 World Cruise.  Q3 call could be very interesting.  I think to cut down on visibility they will probably hold it on Election Day.

[greykitty]

About ten minutes after the earnings call closed, I got my email 'invitation' to Return with Regent - I thought they said there was so much pent up demand?   

 

Ok, to be fair, shouldn't be hard, or expensive,  to send electronic marketing to anyone who signed up for a earnings call.  But, at this point in the COVID universe, not making any free loans for nonessential travel when who knows if even 2021 will actually see product delivered, or what that product will consist of.  Some of these experiences to use credits on seem highly unlikely to me, absent a remarkable advance in COVID mitigation.

 

Use your $1,000 Shipboard Credit to witness Alaska's glistening glaciers up-close on a helicopter adventure, rediscover your favorite European city with a private car and driver or pamper yourself on board with a deeply relaxing treatment from Serene Spa & Wellness™.

Fulfill your travel dreams by planning your ideal escape with Regent Seven Seas Cruises, then book with the peace of mind Regent Reassurance* offers and indulge with your $1,000 Shipboard Credit on 2021 Alaska, Northern Europe and Mediterranean voyages.

Book by August 31, 2020.

[mrlevin]

Kitty, FdR did say that there will be fewer cruise ships in Alaska next year; probably going from four to three.  Probably one of the NCL ships (Bliss or Joy) will be the one cut.

[greykitty]

I missed the first 15 minutes of the call, but this seems a decent quick overview of what I did hear.  I'm don't know that I'm as optimistic about a 2Q21 return of most of the fleet, though, but it'd be nice if their prediction holds.

 

https://www.seatrade-cruise.com/news/recent-cruise-coronavirus-cases-handled-well-chance-learn-del-rio

 

I was glad that Mr. del Rio, at least in public, came down on the 'learning' bench regarding this week's affected cruise lines

 

Coronavirus outbreaks on several other cruise lines that have resumed sailing give an 'opportunity to learn,' Norwegian Cruise Line Holdings CEO Frank Del Rio said, adding that ports and the lines have handled these situations 'very, very well.'

'There's no way to spin the initial re-emergence of COVID aboard vessels,' Del Rio said Thursday, 'but it's an opportunity to learn from it. This virus teaches us something every day. While it's disappointing, I'm glad the ports, that the cruise companies that suffered these setbacks handled it very, very well.

'We haven't had a repeat of what happened earlier during the pandemic crisis.'

[Travelcat2]

First, while I may be a bit prejudice, I truly feel that Frank Del Rio is a genius and what he has done since becoming CEO of NCLH has been very positive for all three brands.  Regent in particular has never had the the ships in as good of shape as they are today and the food choices - especially in CR is better than we have seen in many years.  

 

In terms of fares, they have been going up quarterly (on most but not all sailings) for the last several years and I do not see that changing.  There will always be itineraries that people suddenly do not want to visit and those have promotions (one itinerary that sticks out in my mind is Vancouver to Tokyo ...... it wasn't selling well so Regent did not offer it for a while and when was offered again, it became a very popular cruise).  

 

Speaking of fares, we were just l looking at fights from the West Coast of the U.S. to Miami and could not believe how high the fares were.  If airlines continue to increase their fares, it will obviously affective cost of Regent Air.

 

rallydave - what is the source of your information about executive salaries not being cut at Regent?  I do not think this should be stated unless it is a proven fact.  While this is. not a definitive answer, it sure looks like executives had their pay cut https://www.cruiseindustrynews.com/cruise-news/23046-norwegian-extends-pay-cuts-for-top-executives.html

 

[Bellaggio Cruisers]

2 hours ago, greykitty said:

Supposedly NCL's new Ninja Turtle (excuse me, Leonardo) ships will be smaller, but not that small.  Harry Sommer says you start losing economies of scale under 2,000. 

 

That said, I've been thinking that very possibly travel cruising may be returning to the pre-Love Boat days, as a true luxury affordable to only the wealthy. Where the ROI breaks, I don't really know.  

 

Also, who knows if any of the new order ships by any line get built, and who will finally take possession.

https://thepointsguy.com/news/norwegian-cruise-line-ordering-smaller-ships/

 

 

 

 

please note.... this article was written in December 2019.... before covid.