Business Update from RCC Ltd

[marieps]

This was released today:

 

https://www.rclinvestor.com/press-releases/release/?id=1470

 

It indicates a strengthened liquidity position of $2.45 billion.    Fain now on record that June 11 may not hold as the restart date.   No kidding.  The stock is up more than $1 on the news.

Edited May 8, 2020 by marieps

[marieps]

Buried in the release: they are halting the dividend.  No surprise. 

[az_tchr]

1 hour ago, marieps said:

Buried in the release: they are halting the dividend.  No surprise. 

So at $250M a month they have liquidity for about 10 months.  

The big question is when do we get a vaccine?  Until then are countries that will be still dealing with COVID allow cruise ships?  BC leader Horgan stated yesterday that things like conventions with groups of over 50 not likely to resume until then.  When is "then"?

Not very likely until next year.

 

[grandgeezer]

2 hours ago, marieps said:

Buried in the release: they are halting the dividend.  No surprise. 

 

That’s why the share price didn’t drop, it was figured in already. The next thing that should go is the shareholder credit.

 

 

[omeinv]

2 minutes ago, grandgeezer said:

 

That’s why the share price didn’t drop, it was figured in already. The next thing that should go is the shareholder credit.

 

 

Not very likely.  The shareholder credit is not a cost in the same sense as a dividend, instead it's an inducement to cruise.  Even when the stock was below $6.00 per share in 2009, the shareholder credit stayed; although they changed it not to be combinable with other offers, and have since relaxed that somewhat. 

 

Lenders and other sources of liquidity will rightly object to dividends and stock buy-back plans; but the shareholder credit serves as an enticement to get people on the ships and thus won't generate that sort of issue. 

 

I'm sure someone at RCL has figured exactly what a non-refundable on board credit costs the company, and I'm fairly certain that in this climate, they'd gladly extend that amount to generate a paid booking. 

 

Harris

Denver, CO

 

 

[marieps]

17 minutes ago, omeinv said:

Not very likely.  The shareholder credit is not a cost in the same sense as a dividend, instead it's an inducement to cruise.  Even when the stock was below $6.00 per share in 2009, the shareholder credit stayed; although they changed it not to be combinable with other offers, and have since relaxed that somewhat. 

 

Lenders and other sources of liquidity will rightly object to dividends and stock buy-back plans; but the shareholder credit serves as an enticement to get people on the ships and thus won't generate that sort of issue. 

 

I'm sure someone at RCL has figured exactly what a non-refundable on board credit costs the company, and I'm fairly certain that in this climate, they'd gladly extend that amount to generate a paid booking. 

 

Harris

Denver, CO

 

 

I agree.  I just sold the 100 shares I bought at the bottom.  I'm hoping for another entry point once Fain bites the bullet and cancels thru July as CCL has done.  As long as the shareholder credit remains combinable with other promos I'm happy to own stock.  

[Orator]

20 minutes ago, marieps said:

I agree.  I just sold the 100 shares I bought at the bottom.  I'm hoping for another entry point once Fain bites the bullet and cancels thru July as CCL has done.  As long as the shareholder credit remains combinable with other promos I'm happy to own stock.  

They have suspended the dividend and I expect the stock holder benefit to go away as well.

[marieps]

5 minutes ago, Orator said:

They have suspended the dividend and I expect the stock holder benefit to go away as well.

Hope Harris, the poster above, is right.  If they drop it, I'll take my little profit and spend it on a cruise, all good.

[mahdnc]

The press release mentions that several ships are "transitioning into cold layup". I wonder which ones those are.  

[grandgeezer]

1 hour ago, omeinv said:

Not very likely.  The shareholder credit is not a cost in the same sense as a dividend, instead it's an inducement to cruise.  Even when the stock was below $6.00 per share in 2009, the shareholder credit stayed; although they changed it not to be combinable with other offers, and have since relaxed that somewhat. 

 

Lenders and other sources of liquidity will rightly object to dividends and stock buy-back plans; but the shareholder credit serves as an enticement to get people on the ships and thus won't generate that sort of issue. 

 

I'm sure someone at RCL has figured exactly what a non-refundable on board credit costs the company, and I'm fairly certain that in this climate, they'd gladly extend that amount to generate a paid booking. 

 

Harris

Denver, CO

 

 

 

There’s a huge difference in their financial situation between 2009 and 2020. In 2009 they made money and they had steady cashflow as there was no shutdown. In 2020 they have had very little cashflow in the last three months and there s no change in sight in the near future. Most of their new bookings are being funded by the fccs generated by the shutdown. Also don’t forget about the $2,000,000,000+ in loans that has to be paid back.

[jalves]

3 hours ago, az_tchr said:

So at $250M a month they have liquidity for about 10 months.  

Please don't confuse expenses with cash flow.  If you do want to do that comparison, please also consider how much cash is coming in.

 

 

 

[omeinv]

37 minutes ago, grandgeezer said:

 

There’s a huge difference in their financial situation between 2009 and 2020. In 2009 they made money and they had steady cashflow as there was no shutdown. In 2020 they have had very little cashflow in the last three months and there s no change in sight in the near future. Most of their new bookings are being funded by the fccs generated by the shutdown. Also don’t forget about the $2,000,000,000+ in loans that has to be paid back.

Indeed, but the shareholder benefit costs the company zero unless the person receiving it is paying for a cruise.  It's akin to things like Captain's Club benefits, and any promotion designed to encourage bookings.  Those expenses are factored out as a cost of doing business.  Offering the shareholder benefit is very much like offering someone pre-paid gratuities.  It's an expense, but if it generates a booking for Celebrity that otherwise either would not have happened, or would have gone to Princess, it's money well spent.  And, it has a component similar to a loyalty program; and if it can not only encourage a customer to book, but prevent that customer from even considering another company, all the better.

 

Harris

Denver, CO

[shipshape sam]

25 minutes ago, omeinv said:

Indeed, but the shareholder benefit costs the company zero unless the person receiving it is paying for a cruise.  It's akin to things like Captain's Club benefits, and any promotion designed to encourage bookings.  Those expenses are factored out as a cost of doing business.  Offering the shareholder benefit is very much like offering someone pre-paid gratuities.  It's an expense, but if it generates a booking for Celebrity that otherwise either would not have happened, or would have gone to Princess, it's money well spent.  And, it has a component similar to a loyalty program; and if it can not only encourage a customer to book, but prevent that customer from even considering another company, all the better.

 

Harris

Denver, CO

Agree.  It is a marketing expense.  Lenders will not be unhappy with them generating more sales and $100 is a pretty good expenditure to get a booking especially to get them jump started again.

Edited May 8, 2020 by shipshape sam

[spencerdrivecruiser]

Still wondering if their generous CC amenities will be reduced somewhat.  X's CC program is the most generous in the business, especially at E+ and Z levels.  Waiting on the sidelines for many things to fall into place before booking any future cruises with any Cruiseline.

[VitaminSea53]

16 hours ago, mahdnc said:

The press release mentions that several ships are "transitioning into cold layup". I wonder which ones those are.  

I wondered that as well. And how long does it take to bring a ship back from Cold Layup?  I am trying to determine the fate of Constellation. 

[Oceangoer2]

17 minutes ago, VitaminSea53 said:

I wondered that as well. And how long does it take to bring a ship back from Cold Layup?  I am trying to determine the fate of Constellation. 

It crossed my mind that if X is putting out a program which is allowing re-booking my Nov. '20 cruise to Nov. '21, they have a pretty solid idea that this year's autumn cruises and most likely winter as well aren't happening.  Crew being sent home is an indicator...it'll take time to re-hire and train so next Spring might be the first cruise out.

[kwokpot]

35 minutes ago, oceangoer2 said:

It crossed my mind that if X is putting out a program which is allowing re-booking my Nov. '20 cruise to Nov. '21, they have a pretty solid idea that this year's autumn cruises and most likely winter as well aren't happening.  Crew being sent home is an indicator...it'll take time to re-hire and train so next Spring might be the first cruise out.

I also got an email for my November 14th Apex cruise and I did think that was unusual. Contrast that to what NCL is doing by sending out emails to bid for room upgrades for my July 9th Greek Islands cruise from Rome which has a 0% chance to sail.

[VitaminSea53]

9 minutes ago, kwokpot said:

I also got an email for my November 14th Apex cruise and I did think that was unusual. Contrast that to what NCL is doing by sending out emails to bid for room upgrades for my July 9th Greek Islands cruise from Rome which has a 0% chance to sail.

What is the Apex email saying?

Edited May 9, 2020 by VitaminSea53
Clarification

[kwokpot]

6 minutes ago, VitaminSea53 said:

What is the Apex email saying?

Here's the email:

We know you're looking forward to your vacation on Celebrity Apex^SM, which sails on November 14, 2020, now more than ever.

To give you peace of mind, we’ve enhanced our Cruise with Confidence program in a variety of ways, so you can make upgrades or change plans more easily—giving you the ultimate flexibility.

Best Price or Best Offer
If the fare on your sailing is reduced or the promotion gets better, give us a call and we’ll honor your choice right up to 48 hours before you sail.

Future Cruise Credit
You have up to 48 hours before you sail to cancel and receive 100% of the amount paid in a Future Cruise Credit to use toward any sailing through May 4, 2022.

Same Cruise, Same Price
Want to take the same cruise the following year for the same price and with the same promotion? You can. Simply make this change by August 1, 2020.

With the flexibility to change your vacation, you have the confidence you need during these challenging times. After all, it’s your vacation—and now it’s your choice.

We can't wait to travel the world again with you.

Until then, take care.

With sincere gratitude,
Celebrity Cruises

 

Edited May 9, 2020 by kwokpot

[dabear]

A "cold lay-up" is when engines and machinery are turned off. It may be for a short time or for years. Usually the minimum to recomission a ship is 3 weeks but may be much longer depending upon the length of lay up and the deterioration. Survey and tests may be also greater to recommission the ship. I wonder if X is planning to cold lay up the m class ships or some of them, especially since we like them & scheduled a cruise one Infinity in 2021 to replace our cancelled one in 2020. . Also, X is continuing selling m class ship cruises and may be misleading the public to collect cash.

Edited May 9, 2020 by dabear

[Fouremco]

19 hours ago, mahdnc said:

The press release mentions that several ships are "transitioning into cold layup". I wonder which ones those are.  

 

34 minutes ago, dabear said:

A "cold lay-up" is when engines and machinery are turned off. It may be for a short time or for years. Usually the minimum to recomission a ship is 3 weeks but may be much longer depending upon the length of lay up and the deterioration. Survey and tests may be also greater to recommission the ship. I wonder if X is planning to cold lay up the m class ships or some of them, especially since we like them & scheduled a cruise one Infinity in 2021 to replace our cancelled one in 2020. . Also, X is continuing selling m class ship cruises and may be misleading the public to collect cash.

This post by our resident expert marine engineer provides an excellent overview of the difference between cold and warm layups:

 

 

[Oceangoer2]

1 hour ago, kwokpot said:

Here's the email:

We know you're looking forward to your vacation on Celebrity Apex^SM, which sails on November 14, 2020, now more than ever.

To give you peace of mind, we’ve enhanced our Cruise with Confidence program in a variety of ways, so you can make upgrades or change plans more easily—giving you the ultimate flexibility.

Best Price or Best Offer
If the fare on your sailing is reduced or the promotion gets better, give us a call and we’ll honor your choice right up to 48 hours before you sail.

Future Cruise Credit
You have up to 48 hours before you sail to cancel and receive 100% of the amount paid in a Future Cruise Credit to use toward any sailing through May 4, 2022.

Same Cruise, Same Price
Want to take the same cruise the following year for the same price and with the same promotion? You can. Simply make this change by August 1, 2020.

With the flexibility to change your vacation, you have the confidence you need during these challenging times. After all, it’s your vacation—and now it’s your choice.

We can't wait to travel the world again with you.

Until then, take care.

With sincere gratitude,
Celebrity Cruises

 

I received the same email but personalized with my name, ship, and cruise date.

 

There's been speculation that when X cruises continue, there'll be less of them sailing.  I can see certain ships being taken off the water (meaning no cruises on them as I don't know anything about 'cold or warm' layups) with reduced number of ships and cruisers depending on numbers willing to 'take a chance' on sailing at all...now or a year from now.

Edited May 9, 2020 by oceangoer2

[omeinv]

30 minutes ago, dabear said:

A "cold lay-up" is when engines and machinery are turned off. It may be for a short time or for years. Usually the minimum to recomission a ship is 3 weeks but may be much longer depending upon the length of lay up and the deterioration. Survey and tests may be also greater to recommission the ship. I wonder if X is planning to cold lay up the m class ships or some of them, especially since we like them & scheduled a cruise one Infinity in 2021 to replace our cancelled one in 2020. . Also, X is continuing selling m class ship cruises and may be misleading the public to collect cash.

You're correct about the definition of a cold layup.  However, from all accounts, the cruise lines are using the term differently.  They're talking about keeping the necessary marine crew in place to keep the ship functional, but not having hotel crew, or the full complement of marine crew.  This would keep the time for going back into service in the frame of weeks.  If a cruise ship was put into true cold layup, it would be a very lengthy process both to enter that state, and to come back from it. 

 

Carnival Corp is talking about taking older ships out of service, and across all lines I would expect RCL to do the same.  Royal Caribbean (the line) has ships that are quite dated, and likely would have been sold. off had demand not been so strong prior to the Covid outbreak. 

 

For Celebrity specifically, I would foresee more of a planned modified layup, based on lack of cruises in a region, for example IF Alaska has no season this year, ships that were dedicated to those sailings, would not be in service.  Same for Europe.  In normal times if sometign happened to one region, they woudl likely move the ship into another, and try to generate revenue by offering new sailings; but that's not viable in this condition, so removing/transferring crew, and partially laying up the ship makes sense.  Then as cruises return, they could bring the ships back in a reasonably fast, and orderly manner. 

 

Harris

Denver, CO

[BigAl94]

20 hours ago, VitaminSea53 said:

I wondered that as well. And how long does it take to bring a ship back from Cold Layup?  I am trying to determine the fate of Constellation. 

Some general info here https://thepointsguy.com/news/cruise-lines-could-store-ships-months-coronavirus/