How much more debt can cruise lines incur?

[drsel]

Actually MSc has already restarted Cruises in Europe

[CruiserBruce]

19 hours ago, beerman2 said:

The closest to an expert on here is Chengkp75, the rest are basically opinions. Post #2 might be exactly what they are positioning for and seems highly likely.

 

What purveyors in their right mind are willing to sell product to cruiselines knowing full well the money might not be there.

 

This is all food for thought , nothing more nothing less. Some just need to take it to a different level.

I think Chengkp75 is a wonderful source on how ships function, and I love it when he chimes in. Not sure he is an expert in international finance. Everyone here is just speculating.

[drsel]

I think Chengkp75 is a wonderful source on how ships function, and I love it when he chimes in. Not sure he is an expert in international finance. Everyone here is just speculating.

Do you have a YouTube channel with the name cruiser Bruce

[CruiserBruce]

Just now, drsel said:

1 hour ago, CruiserBruce said:

I think Chengkp75 is a wonderful source on how ships function, and I love it when he chimes in. Not sure he is an expert in international finance. Everyone here is just speculating.

Do you have a YouTube channel with the name cruiser Bruce

No.

[navybankerteacher]

3 hours ago, neverbeenhere said:

In the end, they can borrow as much as WE are willing to pay for.

That’s fairly similar to what people had to say about Eastern railroads in the 1960’s.

[rkacruiser]

8 hours ago, Hlitner said:

Some have speculated that the long term big winner will be MSC.  They are in a unique position since they are a family owned company with huge assets (they are also one of the largest Container Ship companies in the world) and continuing income from their other holdings. 

 

And, having sailed on one MSC cruise, the cruise product was better than the cruise product that I have experienced from time to time on the "mainstream" cruise lines.

 

For two of the "big three" cruise lines, I think CCL and RCI will find a way to prevail.  Just as long as this "no booked revenue" situation does not last for a very long time.  If Aida and Costa have successful starts soon--which, I think, are scheduled--that small revenue stream will be of value.  For RCI, what's their plan for Europe? 

 

[Cruzaholic41]

On 9/2/2020 at 12:51 PM, beerman2 said:

The closest to an expert on here is Chengkp75, the rest are basically opinions. Post #2 might be exactly what they are positioning for and seems highly likely.

 

What purveyors in their right mind are willing to sell product to cruiselines knowing full well the money might not be there.

 

This is all food for thought , nothing more nothing less. Some just need to take it to a different level.

Chengkp75 is a chief engineer. Others like Heidi13 (ship captain) and Aquahound (maritime criminal investigator) are also solid. However, none currently work in the cruise industry (I think), and none are financial experts (again, I think). I’m sure someone on these boards is far better to speak on that topic, but I don’t know who. 

Edited September 4, 2020 by Cruzaholic41

[Hlitner]

 

8 hours ago, CruiserBruce said:

I think Chengkp75 is a wonderful source on how ships function, and I love it when he chimes in. Not sure he is an expert in international finance. Everyone here is just speculating.

The information on the structuring of the various financial deals is not speculation, but simply fact (and public information).  Whether any of the lines ultimately move into the world of bankruptcy is, indeed, speculation.  At this point that is likely dependent on how soon cruise lines can get operations up and running.  Future bookings are actually very good (according to all the cruise lines and some industry insiders).  Investors do not like bankruptcy (even when its Chapter 11) because they lose control and also have to bear an additional burden of substantial legal costs (for representation at the bankruptcy table).  The Saudis did make a major play with CCL so they must think it is a pretty reasonable bet that CCL will survive and be able to repay the debt.  Much of the info we have seen on RCI seems to be positive (financially) and their RCI product can do quite well in a limited short cruise Caribbean market.  Their Celebrity product should be OK assuming that Europe reopens some of its ports.   Azamara needs ports for their ambitious itineraries and that could be a problem.

 

Getting back to CCL, Carnival can move to its traditional roots of primarily short (7 day or less) cruises in the Caribbean.  But CCL has some real challenges with other products such as Princess, Seabourn, and HAL who all depend on more exotic itineraries around the world.  If ports open they will do fine..but if ports continue to stay closed those companies could be in big trouble.  

 

I think Norwegian Holdings is very vulnerable.  The company does not have pockets as deep as CCL and RCI and two of their 3 companies (Regent and Oceania) depend on exotic itineraries for their operations.  IMHO that company will live or die depending on how many ports (around the world) open up to its ships.

 

MSC is unique (we talked about this earlier).  The line is mostly dependent on the European market with a growing presence in the Caribbean.  Assuming that most European ports reopen by mid 2021 I think they will do OK.  Keep in mind that MSC is a very popular product with Europeans and less dependent on the US market.  But they keep expanding their operations in North America and I think that both RCI and CCL have much to fear from this competitor.

 

I think the big unknown is whether ports (around the world) will quickly reopen to cruise ships.  Without ports the cruise lines will have a very difficult time.  Like many experienced cruisers/travelers we have booked several future cruises (with itineraries as long as 30 days) but are hedging our bets by taking advantage of reasonable deposits and not booking any non-refundable related travel.  At this point we have had 3 cruises (30 day, 18 day, 14 day) cancelled without losing a penny.  Gambling on any kind of non-refundable reservations (cruises, air, hotels, tours, etc) seems like a silly bet.  

 

As to the smaller players I do not know enough about Viking's finances to predict their future.  As to Richard Branson's new Virgin Cruises.....this entire COVID thing is the worst possible nightmare and the worse possible time.  I would be very hesitant to put anything but a very small deposit on any of their future cruises.

 

Hank

[JRG]

This is a very fine assessment of the current cruise industry status for us and it addess many items which I would love to augment on,  but that would be too much to speak about.   Some followup observations:

 

The textbook answer to the question is that the cruiselines can incur as much debt as long as they can support the debt service from their operations.    For some like NCL,   the auditing firms are questioning their 'ongoing concern' and that is the big red flag.

 

The comment Aquahound made in another thread about NCL mothballing, if true, is noteworthy.

 

It is also noteworthy that the SAUDI's have a relatively new stake in CCL,  and they are positioned vertically with fuel and oil prices a big part of the cruising equation to make things interesting for third parties too.   

 

The cruise ships are undergoing a process like Darwin's 'natural selection' in that those that can't be operated profitably are doomed to extinction.  The fittest will survive and the new will evolve.   It is strange but it is happening.

 

Properties of micro-economics are on hold because there is no 'perfect competition' in the marketplace.  It is chaos so discussions of supply and demand have to be tempered.    It is an industry 'in duress" according to stock analysts.

 

As for FCC's, It feels to me like there is a squeeze looming out there in terms  excess FCC and fewer cruises with lower occupancy.    

 

The port question is bi-lateral too as we know the cruiselines need them.    The cashflow is needed at the local levels by the ports and they will find a way to accommodate tourism. The 'seige' will give way.

 

 

Edited September 4, 2020 by JRG

[rkacruiser]

Too much to quote, but most of what Hlitner and JRG recently posted makes good sense to me and to which I agree.  

[rkacruiser]

22 hours ago, Hlitner said:

Gambling on any kind of non-refundable reservations (cruises, air, hotels, tours, etc) seems like a silly bet.  

 

 

At this time, I think my odds of winning the Ohio Lottery might be more successful than making a non-refundable reservation for any travel product.  

 

22 hours ago, Hlitner said:

Keep in mind that MSC is a very popular product with Europeans and less dependent on the US market.  But they keep expanding their operations in North America and I think that both RCI and CCL have much to fear from this competitor.

 

100% agree based on what I learned and experienced in January during my MSC Meraviglia cruise.  The CD was a former American HAL CD who was lured out of retirement to be the CD for Meraviglia's 2019-2020 season of US cruises.  During the CC M&G, he was very "up front" in saying that MSC wants to establish a reputation in the North American market.  

 

Look at my CC signature regarding cruise line patronage.  I was impressed with my MSC cruise experience.  It was as good as, and in some ways better, than most of my HAL cruises.  There was one major negative, however.  The embarkation and disembarkation experiences at the Port of Miami.    

[SelectSys]

3 hours ago, JRG said:

 

As for FCC's, It feels to me like there is a squeeze looming out there in terms  excess FCC and fewer cruises with lower occupancy.    

 

 

This to me is another factor in terms of raising prices.  Make sure these get refunded at the lowest real cost possible.

[Hlitner]

1 hour ago, rkacruiser said:

 

At this time, I think my odds of winning the Ohio Lottery might be more successful than making a non-refundable reservation for any travel product.  

 

 

100% agree based on what I learned and experienced in January during my MSC Meraviglia cruise.  The CD was a former American HAL CD who was lured out of retirement to be the CD for Meraviglia's 2019-2020 season of US cruises.  During the CC M&G, he was very "up front" in saying that MSC wants to establish a reputation in the North American market.  

 

Look at my CC signature regarding cruise line patronage.  I was impressed with my MSC cruise experience.  It was as good as, and in some ways better, than most of my HAL cruises.  There was one major negative, however.  The embarkation and disembarkation experiences at the Port of Miami.    

We have a good friend who used to be an officer on HAL.  He now works for MSC (it was his decision to leave HAL) where he is apparently a lot happier then when he worked for HAL.  Go figure.  On our last MSC cruise we also ran into an acquaintance who used to work for Celebrity but also moved over to MSC because he thought there were better opportunities.  MSC has been expanding in a major way (adding about 2 new builds per year) which creates lots of opportunities for experienced senior staff.  The company is not shy about hiring folks away from other lines. 

 

Hank