Will NCL survive the COVID-19?

[4774Papa]

https://www.barrons.com/articles/royal-caribbean-norwegian-cruise-line-are-put-on-credit-watch-over-extended-suspensions-51607700601

 

[ColeThornton]

4 minutes ago, 4774Papa said:

https://www.barrons.com/articles/royal-caribbean-norwegian-cruise-line-are-put-on-credit-watch-over-extended-suspensions-51607700601

 

 

"Subscription required"

[Two Wheels Only]

We're probably not allowed to post the entire article but.....

 

Meanwhile, NCL, which also carries a B+ issuer rating, was also placed on credit watch negative following another extension of its cruise suspension, this time to at least Feb. 28 for many voyages. NCL is a subsidiary of Norwegian Cruise Line Holdings.

“We expect [Norwegian] to burn more cash relative to our previous expectations and for leverage to remain very high in 2021,” according to S&P Global Ratings.

 

Norwegian declined to comment.

As of Sept. 30, the company’s long-term debt totaled $10.5 billion, up from $6.1 billion at the end of 2019. The company’s CFO, Mark Kempa, told analysts during the third-quarter earnings call last month that he expected the fourth-quarter monthly cash burn to be around $175 million “if all of our vessels remained in their lay-up status at minimum manning levels and did not begin preparations for a return to service.”

As of Thursday’s close, Norwegian’s stock was up 20% in December, compared with about 1% for the S&P 500. Royal Caribbean had gained about 2% over that time.

[david_sobe]

Yes

[Formula280SS]

25 minutes ago, 4774Papa said:

https://www.barrons.com/articles/royal-caribbean-norwegian-cruise-line-are-put-on-credit-watch-over-extended-suspensions-51607700601

 

 

Cash flow sustainability is going to be real tight.  It looks like we're well into 3rd or 4th quarters of 2021 for some semblance of what we know as cruising.  The burn rates are massive. 

 

IMO, they really don't have anything left to leverage for debt, so it would have to be some kind of equity raise (or acquisition by someone with incredibly deep, long-term pockets).

 

I wouldn't recommend the faint of heart to invest in any of the big three as, counting the beans, the PPS of NCL for example of over $28 recently equated to almost 93% of the 5-year PPS high "when adjusted for the new equity shares issued and the convertible debt MIN and MAX stock conversion rates" that puts such forward shares at twice the number of a year ago when the High was $60+-.

 

The numbers don't work from an equity perspective.  Now, the debt instruments are under pressure with these ratings.  Some of those are trading at less than the above % of equity "as if."  

 

By the end of June, with no changes in funding, NCL, IMO, will have about 3-months of cash left at the expected now to June burn rates.

 

Plus, that is assuming that the cruise lines are not required to change policies on cash refunds which, for each, represent almost a life line of credit.

 

Hope to be wrong.

[sfaaa]

Vaccine coming to the rescue. Things will be back to near normal by this time next year.

[tallnthensome]

1 hour ago, sfaaa said:

Vaccine coming to the rescue. Things will be back to near normal by this time next year.

If normal doesn’t equal cruising before December of 2021 you can bet that they will be bankrupt long before then. They MIGHT survive until the end of April with no sailings .

Edited December 11, 2020 by tallnthensome

[sfaaa]

Unless creditors want to get back $0.10 on the dollar from their existing loans, there is little financial incentive for them to pull the plug now when cruising is about to resume.

[Love my butler]

I hope so, but I am seriously doubting it at this point.

[4774Papa]

1 hour ago, tallnthensome said:

If normal doesn’t equal cruising before December of 2021 you can bet that they will be bankrupt long before then. They MIGHT survive until the end of April with no sailings .

I expect millions will be vaccinated by Summer of 2021.   Cruiselines will likely require a vaccine once a substantial percentage of the population is vaccinated.  Still, it will be tight for the cruise lines.   I wish them well.  Perhaps if cruise lines have to go into bankruptcy reorganization, they could still survive beyond that.

[BirdTravels]

6 hours ago, 4774Papa said:

I expect millions will be vaccinated by Summer of 2021.   Cruiselines will likely require a vaccine once a substantial percentage of the population is vaccinated.  Still, it will be tight for the cruise lines.   I wish them well.  Perhaps if cruise lines have to go into bankruptcy reorganization, they could still survive beyond that.

There are hundreds of millions of people in the United States. And billions worldwide. 

 

100 million doses = 15% of the US (need 700 million doses) 

100 million doses = 0.6% of the World (need 15.6 billion doses)

[hamrag]

4 hours ago, BirdTravels said:

There are hundreds of millions of people in the United States. And billions worldwide. 

 

100 million doses = 15% of the US (need 700 million doses) 

100 million doses = 0.6% of the World (need 15.6 billion doses)

Exactly that, well said!

[CruiseMH]

7 hours ago, BirdTravels said:

There are hundreds of millions of people in the United States. And billions worldwide. 

 

100 million doses = 15% of the US (need 700 million doses) 

100 million doses = 0.6% of the World (need 15.6 billion doses)

Most vaccine producers will be able to produce at least 300 Million doses until May next year,plus some more dozen millions until October.And there are a few of these producers.

So i am sure that 50% of the population in the US and Europe could be vaccinated until next october.

this should be enough to fill some ships of the cruise lines.

There will be enough banks that are willing to gice NCL more credits.Reason is that if they don`t do and NCL goes into bankruptcy they won`t get back any of their money. Yes, there are still the ships and other stuff to be sold to create money to give it bank to the banks. But who wants to bux cruise ships at the moment ?

And once cruising restarts i am convinced that the fares will go up by at least 20% or more. There are so many people desperate to cruise again that they will pay these high fares.

 

[4774Papa]

8 hours ago, BirdTravels said:

There are hundreds of millions of people in the United States. And billions worldwide. 

 

100 million doses = 15% of the US (need 700 million doses) 

100 million doses = 0.6% of the World (need 15.6 billion doses)

Pfizer and Moderna vaccines require two doses per person.  AstraZeneca will require one.  Other vaccines will follow.   

Dr. Anthony Fauci, the nation’s top infectious disease expert, said average, healthy Americans could expect to get their first doses as early as April and through July, he told USA Today.

[4774Papa]

More good news:

 

The U.S. Department of Health and Human Services and Department of Defense announced on Friday that they will purchase 100 million additional doses of Moderna's coronavirus vaccine candidate. 

...The purchase will bring the total doses of Moderna's vaccine owned by the federal government to 200 million, HHS said... 

An FDA advisory panel is scheduled to meet Dec. 17 to review the application. 

By the end of 2020, it expects to have approximately 20 million vaccine doses available in the U.S... 

“Securing another 100 million doses from Moderna by June 2021 further expands our supply of doses across the Operation Warp Speed portfolio of vaccines,” said HHS Secretary Alex Azar said in a statement Friday. 

“This new federal purchase can give Americans even greater confidence we will have enough supply to vaccinate all Americans who want it by the second quarter of 2021.”

[HowardK]

in addition to the vaccine, there needs to be time for the case numbers and spread to drop as well. 

Glaxosmithkline will be delayed now, and I hope the US didn't commit to theirs as of yet .

 

I try to accept the fact I might not have a concert/cruise/baseball game until 2022 at this point personally for me. somethings 2023. 

 

I also wonder if a private equity firm i.e. someone like Apollo would buy any of the cruise lines and then make a public offering later if it came to that point. At some point the interest payments due on some of the notes will be huge. 

[BermudaBound2014]

19 hours ago, Two Wheels Only said:

 

As of Thursday’s close, Norwegian’s stock was up 20% in December, compared with about 1% for the S&P 500. Royal Caribbean had gained about 2% over that time.

 

Defies all logic. 

 

 

[sfaaa]

4 hours ago, BermudaBound2014 said:

 

Defies all logic. 

 

 

Buy low sell high. 

[BermudaBound2014]

2 hours ago, sfaaa said:

Buy low sell high. 

 

Yea, my initial playtime w/ cruise stock when covid hit proved quite profitable, but I dropped the potato before it got too hot and I don't plan on touching it again until we figure out who stays and who goes. In my opinion, not all cruise lines will weather this storm. 

[HowardK]

Some cruise lines might need to merge

[zdcatc12]

43 minutes ago, HowardK said:

Some cruise lines might need to merge

For lines operating in the US, there are only really four lines and one of those is privately owned (MSC). Not much to merge.

[BirdTravels]

15 hours ago, 4774Papa said:

More good news:

 

The U.S. Department of Health and Human Services and Department of Defense announced on Friday that they will purchase 100 million additional doses of Moderna's coronavirus vaccine candidate. 

...The purchase will bring the total doses of Moderna's vaccine owned by the federal government to 200 million, HHS said... 

An FDA advisory panel is scheduled to meet Dec. 17 to review the application. 

By the end of 2020, it expects to have approximately 20 million vaccine doses available in the U.S... 

“Securing another 100 million doses from Moderna by June 2021 further expands our supply of doses across the Operation Warp Speed portfolio of vaccines,” said HHS Secretary Alex Azar said in a statement Friday. 

“This new federal purchase can give Americans even greater confidence we will have enough supply to vaccinate all Americans who want it by the second quarter of 2021.”

 

Yes, the initial plan was to spread vaccine orders across multiple manufacturers. Only two of those manufacturers have been able to bring their vaccines to market. All of the rest of the US orders have been placed with companies like AstraZeneca and J&J who are still trying to get their vaccines through trials. The US is being forced to buy more Pfizer and Moderna vaccines, but these orders will be fulfilled after existing orders from other countries (back of the line).

 

Yes, by definition, a new federal purchase will increase confidence since, at this time, failures of other manufacturers (like AstraZeneca and J&J) to bring viable products to market means that the US does not have sufficient vaccines to inoculate healthy people. And, by the time the US gets to healthy people, it will likely be less effective vaccines from yet-to-be-approved manufactures. Remember, the FDA will approve a vaccine if it is effective in at least 50% of the test subjects. 94% effectivity is a bonus. 

 

 

[Roger88]

42 minutes ago, BirdTravels said:

 

Yes, the initial plan was to spread vaccine orders across multiple manufacturers. Only two of those manufacturers have been able to bring their vaccines to market. All of the rest of the US orders have been placed with companies like AstraZeneca and J&J who are still trying to get their vaccines through trials. The US is being forced to buy more Pfizer and Moderna vaccines, but these orders will be fulfilled after existing orders from other countries (back of the line).

 

Yes, by definition, a new federal purchase will increase confidence since, at this time, failures of other manufacturers (like AstraZeneca and J&J) to bring viable products to market means that the US does not have sufficient vaccines to inoculate healthy people. And, by the time the US gets to healthy people, it will likely be less effective vaccines from yet-to-be-approved manufactures. Remember, the FDA will approve a vaccine if it is effective in at least 50% of the test subjects. 94% effectivity is a bonus. 

 

 

I am really looking forward to it. Event though I cant say for sure whether me or my family will be vaccinated, it makes me feel comfortable that many other people will be taking this vaccine and become harmless to some extent. Especially teachers, medical personnel and etc. 

[BermudaBound2014]

15 hours ago, zdcatc12 said:

For lines operating in the US, there are only really four lines and one of those is privately owned (MSC). Not much to merge.

 

True, there are only four major lines. Carnival owns the vast lions share, making up nearly 85% of the  industry. NCL and RCL are tiny dancers in comparison. MSC, as a private company, also owns the largest shipping line in the world. Lots of opportunity for changes.

[sfaaa]

MSC has been trying to expand its itineraries beyond Caribbean in N America especially the lucrative Alaska cruise market. Merging or acquiring NCL at a bargain price will definitely fit into MSC future business plan.

Edited December 13, 2020 by sfaaa