Any signs of bankrupcy for any major cruiselines?

[Wayfairers]

22 hours ago, TNcruising02 said:

I agree.  Right now the virus is raging, so avoiding public places as much as possible is a good idea.  I've been to the grocery store, pharmacy, my office, and home since the middle of March.  As much as I would love to take a vacation, it's just not a good idea.  I am glad that things are opening up and people are getting their jobs back.  Some people are careful and some are not.  That's just the way it is.  I don't feel my risk of contracting covid-19 is greater on a cruise ship than at an airport, on a plane, in an amusement park, at a concert, on the street in marches, or anywhere else that people are in close proximity.   

It feels like a hurricane is moving through the world and the only way to really stay safe is to sit tight out of the storm.

Love your last sentence. It perfectly describes this situation!  Killing me to not travel....we normally travel around 6 months a year and now no travel since April 2019 other than going to our house in West TN or day trips to see family.  Really regretting that decision last April to take the rest of the year off traveling and enjoy the local area.  
 

we are staying away from crowds, hanging out with neighbor but not going into their house and they don’t come into ours.  Grocery, Walmart and occasional take out from a restaurant is all we are doing.  

[drsel]

The Cruise lines will avoid bankruptcy at any cost. they will survive, at least the big 3-- MSC, Royal Caribbean and Carnival.
Small Cruise lines have already closed down and a few more may follow.
The economy is already recovering and the worst is behind us already.

[drsel]

Carnival said it is seeing demand for voyages in 2021, with the majority of bookings being new and not from rescheduling, and will restart voyages from Germany in August.

The company also said on a conference call that it can be cash flow break even at a capacity between 30% and 50%"

[njhorseman]

40 minutes ago, drsel said:

Carnival said it is seeing demand for voyages in 2021, with the majority of bookings being new and not from rescheduling, and will restart voyages from Germany in August.

The company also said on a conference call that it can be cash flow break even at a capacity between 30% and 50%"

"Cash flow break even" means the company will not be able to pay its debt service and will eventually be forced to file bankruptcy. 

[drsel]

But in the long run, once a vaccine is available or the virus is controlled; they will go back to 100 % capacity and then have the funds required to pay off the interest on the loans.
They may never repay the principal or keep rolling it over.
I am glad they found investors willing to lend them money, that too a huge 6.25 billion dollars!

[navybankerteacher]

3 hours ago, drsel said:

The Cruise lines will avoid bankruptcy at any cost. they will survive, at least the big 3-- MSC, Royal Caribbean and Carnival.
Small Cruise lines have already closed down and a few more may follow.
The economy is already recovering and the worst is behind us already.

1) There is no certainty that Royal Caribbean and Carnival will “avoid bankruptcy at any cost”  (whatever that means) - if they run out of money in a prolonged shutdown bankruptcy will be a certainty)

2) The economy has not yet been impacted - wait till the massive tax increases - or printing press money supply resulting from the billions already thrown at COVID start hitting the fan.

3) The worst is hardly behind us - a majority of states are just beginning to be seriously impacted.

[FredT]

Just in....   Cruise and Maritime Voyages is on the brink.  If this article is correct, 5 of its ships have already been seized.   https://apple.news/A4H5R1OQpTvuW6Hl3Un13yA

[wowzz]

2 hours ago, navybankerteacher said:

1) There is no certainty that Royal Caribbean and Carnival will “avoid bankruptcy at any cost”  (whatever that means) - if they run out of money in a prolonged shutdown bankruptcy will be a certainty)

2) The economy has not yet been impacted - wait till the massive tax increases - or printing press money supply resulting from the billions already thrown at COVID start hitting the fan.

3) The worst is hardly behind us - a majority of states are just beginning to be seriously impacted.

+1

drsel has an interesting approach to business finance! The comments about " cash flow break even" are perplexing.  It's like businesses that operate on a marginal costing basis - they always go bust eventually.

[wowzz]

2 hours ago, FredT said:

Just in....   Cruise and Maritime Voyages is on the brink.  If this article is correct, 5 of its ships have already been seized.   https://apple.news/A4H5R1OQpTvuW6Hl3Un13yA

And here as well

https://news.sky.com/story/coronavirus-cruise-operator-cmv-in-last-ditch-bid-to-stay-afloat-12028601

To be clear, the seizing of the ships is more about the humanitarian aspects of the crew's living conditions than the financial status of the company, although that is obviously precarious. 

[navybankerteacher]

38 minutes ago, wowzz said:

+1

drsel has an interesting approach to business finance! The comments about " cash flow break even" are perplexing.  It's like businesses that operate on a marginal costing basis - they always go bust eventually.

There are a number of cruise addicts on these boards who are so desperate to get back on board any ship, going anywhere, that they will grab at the smallest straws which help them feel all will be well soon.

[drsel]

+1

drsel has an interesting approach to business finance! The comments about " cash flow break even" are perplexing.  It's like businesses that operate on a marginal costing basis - they always go bust eventually.

This is what Carnival said, not me.

"The company also said on a conference call that it can be cash flow break even at a capacity between 30% and 50%"

 

I don't know exactly what is their break even capacity. I thought it was much higher.

[drsel]

 

 

 

1) There is no certainty that Royal Caribbean and Carnival will “avoid bankruptcy at any cost”  (whatever that means) - if they run out of money in a prolonged shutdown bankruptcy will be a certainty)

2) The economy has not yet been impacted - wait till the massive tax increases - or printing press money supply resulting from the billions already thrown at COVID start hitting the fan.

3) The worst is hardly behind us - a majority of states are just beginning to be seriously impacted.

"money supply resulting from the billions already thrown at COVID start hitting the fan."

Are you referring to a crash in the value of the dollar or hyperinflation or ?

[drsel]

There are a number of cruise addicts on these boards who are so desperate to get back on board any ship, going anywhere, that they will grab at the smallest straws which help them feel all will be well soon.

I thought that all of us here, who spend hours of their time on Cruise critic forums, for years on end, are die hard cruise addicts

[njhorseman]

2 hours ago, drsel said:

This is what Carnival said, not me.

"The company also said on a conference call that it can be cash flow break even at a capacity between 30% and 50%"

 

I don't know exactly what is their break even capacity. I thought it was much higher.

That's what Carnival said, but apparently you don't know what those words mean. I suppose that's why they used those words, because they know most people would not know and would think it was a more financially positive statement than it actually is.

 

Yes they can operate a ship on a cruise at 30%-50% capacity and break even for the cruise, but that doesn't give them any money to pay the outstanding loans on the ship or their corporate overhead. It just means they wouldn't be losing any additional cash by running the cruises. They would  be at best treading water financially.

 

The cruise industry has borrowed money at extraordinarily high interest rates  to bolster their cash on hand. in some cases they've obtained loan holidays from their lenders that allow them to postpone principal and interest payments that would have come due in the near future by agreeing to pay interest at rates above those of the original terms of the loans. In the not too distant future the cruise lines will have to start repaying those loans...both the principal and extraordinarily high interest...and "break even" cruises operating at 30-50% of capacity don't provide any money to do that. 

Edited July 15, 2020 by njhorseman

[babs135]

Carnival shedding more ships

 

https://www.tradewindsnews.com/cruise-and-ferry/carnival-to-sell-one-costa-cruises-two-holland-ships/2-1-842327

[wowzz]

2 hours ago, drsel said:

This is what Carnival said, not me.

"The company also said on a conference call that it can be cash flow break even at a capacity between 30% and 50%"

 

But do you know that it means they will go bust at 50% capacity?

[neverbeenhere]

The cruise lines need cash flow in 21 to obtain more financing. They can make money in 22 and 23...

[navybankerteacher]

2 hours ago, drsel said:

 

 

 

 

"money supply resulting from the billions already thrown at COVID start hitting the fan."

Are you referring to a crash in the value of the dollar or hyperinflation or ?

Yes, a strong possibility , the two would go together - how do you think the US government will cover the billions already expended on this exercise - and the many billions more to come - especially given the fact that regular tax revenues have plummeted due to shutting down (which apparently needs to be repeated, thanks to close to two dozen states who jumped the re-opening gun).   Trying to cover it all through tax increases would likely mean that a lot of folks who now have sufficient disposable income to cruise would see another (involuntary) use for their funds.

 

Just as you seem to ignore debt service requirements of cruise lines, you might be missing how our government needs to operate long term.

[navybankerteacher]

5 minutes ago, neverbeenhere said:

The cruise lines need cash flow in 21 to obtain more financing. They can make money in 22 and 23...

They will also need lenders to obtain that “more financing”.  Would you be willing to help out by buying some junior subordinated debentures?

 

They have already mortgaged their hard assets to the hilt.

Edited July 15, 2020 by navybankerteacher

[iancal]

Ask that question at the end of March, 2021.

Edited July 15, 2020 by iancal

[drsel]

 

 

 

Yes, a strong possibility , the two would go together - how do you think the US government will cover the billions already expended on this exercise - and the many billions more to come - especially given the fact that regular tax revenues have plummeted due to shutting down (which apparently needs to be repeated, thanks to close to two dozen states who jumped the re-opening gun).   Trying to cover it all through tax increases would likely mean that a lot of folks who now have sufficient disposable income to cruise would see another (involuntary) use for their funds.

 

Just as you seem to ignore debt service requirements of cruise lines, you might be missing how our government needs to operate long term.

 

US government pumped billions of dollars into the US economy during the 2008 global financial crisis also.

This did cause a short term fall in the value of the dollar but over the next 12 years, it appreciated significantly against the euro, pound and most emerging market currencies

 

[navybankerteacher]

10 minutes ago, drsel said:

 

 

 

 

 

US government pumped billions of dollars into the US economy during the 2008 global financial crisis also.

This did cause a short term fall in the value of the dollar but over the next 12 years, it appreciated significantly against the euro, pound and most emerging market currencies

 

2008’s expenditures were just a blot on the ledger compared with what we have already spent.   More important :  much of it - particularly the advances made to keep banks afloat - was REPAID IN FULL The only real losers in that exercise were the stockholders of General Motors and Chrysler..   We, as a nation, are not going to see any such recovery this time around.

Edited July 15, 2020 by navybankerteacher

[drsel]

thanks Navy Bank teacher.

So which are the sectors which will go bankrupt-- aviation, shipping, automobile, travel and tourism related sectors? Banks?

 

 

[sfaaa]

Vaccine is the magic solution to get cruise lines back into full operation and revenue generating. As gloomy as the picture may look at the moment,  Wall Street certainly hasn't written the cruise lines off as dead and cruise line stocks are all up today.

[navybankerteacher]

1 hour ago, drsel said:

thanks Navy Bank teacher.

So which are the sectors which will go bankrupt-- aviation, shipping, automobile, travel and tourism related sectors? Banks?

 

 

I would say that travel and tourism is at most risk -- being activities most easily deferred by customer base.  Airlines also -- as they operate on fairly close margins at best of times - with exception of Southwest virtually all major players have already gone through bankruptcy in recent years.  Without ongoing major support from Govt. they are virtually sure to again.  Banks have largely already set aside loan loss reserves in anticipation of significant defaults on loans , and may be able to weather a good number of months.   

 

One sector you have not mentioned but which is in deep trouble - but which ordinarily cannot seek bankruptcy protection - is local government.  Already close to the bone, their tax revenues are drying up while their day-to-day expenses have been surging.

They cannot print money like the Feds, and their ability to substantially increase tax revenues is limited.  Real estate tax payments are going to be late (at best), local income tax revenues lower due to unemployment, while their service costs will not decline.  I think this area is the real long-term tough one.