Royal Caribbean/celebrity financial health

[graphicguy]

Cruise companies (all leisure travel related companies, for that matter) are just now, over the last 6+ months are coming out of the biggest financial disasters in probably their existence.

 

The Cruise Lines in particular had ZERO revenue for over a year.  They're just now generating revenue since the middle of last summer.  

 

Whatever filings they made to secure additional funding, had to include startup procedures and cash flow (or lack thereof) projections.

 

Crystal is a much smaller cruise line.  The financial mismanagement of their parent, Genting (they own casinos, too....how can you not make money doing that?) is what's causing the Crystal "shell game" with their ship.  

 

If you can not afford fuel, management oversight is to blame.  BTW, I just saw their CEO resigned.  They are not in this for the long haul.

 

I do believe Celebrity and Royal have proven they are.  And, have partnered with financial companies who are well respected.

 

The risk with Carnival, Celebrity, NCL etc, is if their financial partners who structured their deals are less than honest.

[chengkp75]

20 minutes ago, graphicguy said:

The financial mismanagement of their parent, Genting (they own casinos, too....how can you not make money doing that?)

Herein lies the most misunderstandings.  While Lim Kok Thay is chairman and majority owner of both Genting Group (which owns the casinos and has not declared bankruptcy), and Genting Hong Kong, Genting Group sold its 17% ownership of Genting Hong Kong a few years back.

[Lastdance]

I got a little lean with a few booked cruises a week and a half ago, not to mention never taking a FCC.  Just way too much happening to not be aware of future possibilities with all that is happening throughout the world.  My booking now are much more manageable for 2022-2024.

Edited January 24, 2022 by Lastdance

[LB_NJ]

I read that the recent bond sale were "junk" bonds.

 

There is definitely risk in putting down a lot of money for a cruise that is way off.

 

Personally, I will not book anything more than around 6-7 months away and try to have third party insurance that includes bankruptcy protection. 

 

Also, I put down the absolute minimum and take cash, not FCC, whenever possible.

 

FYI, even travel insurance that covers bankruptcy has fine print that excludes some bankruptcies. 

A policy I have excludes bankruptcies more than 15 months after the effective date of the policy.

[rmalbers]

3 hours ago, Happy Cruiser 6143 said:

Be careful when you allege that all credit cards have your back during bankruptcy.  Capital One certainly does not.  I learned that the hard way during all the Iceland tour providers (who had required full payment up front) bankruptcies.  

Ya, fewer and fewer.  Also I think even AMEX plat reduced, at least some, travel protections a year ago or so.  I need to look at that again.

Edited January 24, 2022 by rmalbers

[rmalbers]

"I do believe Celebrity and Royal have proven they are.  And, have partnered with financial companies who are well respected."

 

I know in one of the early 'loans'  RCI put up, at least one, of X's E class ship/s as collateral, I guess I'm not sure about the venture capital firms and using the term 'respected', but the firms loaning the cruise industry money are not going to come out of it empty handed that's for sure.  The cruise industry needed money bad, the cash cows quickly had no cash.

[mek]

2 hours ago, Lastdance said:

I got a little lean with a few booked cruises a week and a half ago, not to mention never taking a FCC.  Just way too much happening to not be aware of future possibilities with all that is happening throughout the world.  My booking now are much more manageable for 2022-2024.

I have one cruise booked for October, 2022 that has been changed more times than I can remember.  I'm simply not willing to book anything else until I see where cruising is headed in 23, 24........

I'm sure the cruise lines are thrilled with those willing to book farther out but I won't do it again for a long time, if ever.

Now if suddenly things would turn around before October, I might book something but it would be very close to the actual sailing date.

[Lastdance]

54 minutes ago, mek said:

I have one cruise booked for October, 2022 that has been changed more times than I can remember.  I'm simply not willing to book anything else until I see where cruising is headed in 23, 24........

I'm sure the cruise lines are thrilled with those willing to book farther out but I won't do it again for a long time, if ever.

Now if suddenly things would turn around before October, I might book something but it would be very close to the actual sailing date.

I understand that, especially if you get burned.  I just had way too many booked, so kept the top cruises...If I am canceled that's one thing; however, no FCC.  I had the Galapagos booked this spring and did not want to put 22,000 in FCC, having to use parts of it for 2023...no way.   Celebrity reneged on what they told us when going in early to Ecuador.  Honestly, I do think my DH and I would be okay, as Ecuador is doing much better than us with vaccinations and Flora/Galapagos is a great cruise.  Notice that I said "think."  Love having choices and the ability to choose...I do not blame you a bit, as everyone has their own risk tolerance level due to longevity...

Edited January 24, 2022 by Lastdance

[Baron Barracuda]

IMO lenders who stuck with cruise lines through shutdown are very unlikely to pull the plug now that sailing has resumed, as slow as progress may currently be.  Evidence of lenders confidence can be seen in how cruise lines have repeatedly been able to  renegotiate outstanding debt, extending maturities and reducing interest rates.  Lenders would never permit this if they were concerned about repayment.  

[canderson]

2 hours ago, Baron Barracuda said:

Evidence of lenders confidence can be seen in how cruise lines have repeatedly been able to  renegotiate outstanding debt, extending maturities and reducing interest rates.  Lenders would never permit this if they were concerned about repayment.  

Under more normal circumstance, I'd agree.  But taking an E class ship as collateral has its own potential downside!  Can't exactly turn one of those into ready cash in a short time frame.  You take the risk of being in the cruise business by accident since the other lines are all in pretty much the same shape.

 

It's not as clear to me that it's a question of confidence as it is assuring they don't get stuck with the underlying assets!  Once you've struck that kind of deal, you'd better be prepared to stick with it.

[smbt1]

On 1/23/2022 at 2:05 PM, Jim_Iain said:

It is best to speak with a financial advisor.  

 

Recent good article on their current balance sheet.

 

https://simplywall.st/stocks/us/consumer-services/nyse-rcl/royal-caribbean-cruises/news/health-check-how-prudently-does-royal-caribbean-cruises-nyse

In addition to what is presented in that article a lot of the cash is fares and deposits paid for cruises not yet taken.  For the big 3 cruise lines that figure is usually more than their cash on hand. Basically some of the money is used to fund operations even before ones cruise is taken. 

[smbt1]

On 1/23/2022 at 2:30 PM, Arizona Wildcat said:

Deposits and payments are supposed to be in escrow accounts.  Since we are dealing with foreign companies, hard to say how one eould fare in a reorganization.   Probably poorly.

Thank you to Jim for posting RCCL balance sheet. It has gone from excellent stockholder equity to negative.  Lots of debt and a multibillion $$ hunk will need to be refinanced shortly.

 

The big 3 rcl, ccl and nclh do not keep cash from fares paid and deposits for cruises not yet taken in an escrow account. The number for those items usually total more than their current cash on had. That is ehy they had to go the fcc route during shutdown, they simply did not have the money to pay it all back. Without borrowing a lot and stock dilution.

[Baron Barracuda]

21 hours ago, canderson said:

Under more normal circumstance, I'd agree.  But taking an E class ship as collateral has its own potential downside!  Can't exactly turn one of those into ready cash in a short time frame.  You take the risk of being in the cruise business by accident since the other lines are all in pretty much the same shape.

 

It's not as clear to me that it's a question of confidence as it is assuring they don't get stuck with the underlying assets!  Once you've struck that kind of deal, you'd better be prepared to stick with it.

Examine their financials and you'll find  much of their borrowings are secured.  Believe one recent debt issue was secured by the entire Celebrity division.  Lenders will usually work with a struggling borrower rather than pull the plug providing they trust management and believe in the long term prospects for the business.  Still in the event of bankruptcy much better to be at the front of the line as a secured creditor than in the rear as an unsecured one.

[rmalbers]

6 minutes ago, Baron Barracuda said:

Examine their financials and you'll find  much of their borrowings are secured.  Believe one recent debt issue was secured by the entire Celebrity division.  Lenders will usually work with a struggling borrower rather than pull the plug providing they trust management and believe in the long term prospects for the business.  Still in the event of bankruptcy much better to be at the front of the line as a secured creditor than in the rear as an unsecured one.

Wow, I didn't see that but I sort of stopped watching RCL stock  (and financials) a while back.  I think there is no doubt a new cruise line will be created out of all this mess as it tapers down.   I'm hopeful none of RCG ships will be involved (hopefully), beyond Azamara that is.   

[sayvan]

On 1/23/2022 at 7:08 PM, glmacruise said:

I wouldn’t trust these cruise lines at all. We are avoiding cruising until further notice.

No need to give notice… bye… 

[phoenix_dream]

On 1/23/2022 at 7:08 PM, glmacruise said:

I wouldn’t trust these cruise lines at all. We are avoiding cruising until further notice.

Good for you. Many of us have many cruises already booked and already fully paid due to lift and shift.  Can't cancel and get a refund. Only FCC

[TeeRick]

14 minutes ago, rmalbers said:

Wow, I didn't see that but I sort of stopped watching RCL stock  (and financials) a while back.  I think there is no doubt a new cruise line will be created out of all this mess as it tapers down.   I'm hopeful none of RCG ships will be involved (hopefully), beyond Azamara that is.   

Azamara was sold to Sycamore Partners by RCG.

[rmalbers]

13 minutes ago, TeeRick said:

Azamara was sold to Sycamore Partners by RCG.

Yes it was, all-cash transaction for $201 million.   I came so close to booking a Cuba cruise with A just before they shut down Cuba (again), what was that, 3 years ago.  I still might do A cruise to thru/around Norway when all this is over.

Edited January 25, 2022 by rmalbers

[Dolebludger]

Even before the current mess, we always selected travel insurance that covers losses due to bankruptcy or discontinuation of service by ANY carrier involved. Not all travel insurance has this coverage, so some research is required. So if a cruise or other trip involves a loss caused by bankruptcy of even an airline, we are covered. 
 

Regarding Crystal, it is owned by Genting which is a very financially shaky conglomerate. It is going broke and sinking Crystal along with it. Crystal alone wouldn’t be viable either. Even before the ties with Genting, it wasn’t profitable. It’s two major ocean cruise ships are old (though well maintained) and rather obsolete. Most cabins are smaller than current standards, too many lack balconies, and there are too few suites. 
 

By comparison, Celebrity and its parent RCCL aren’t involved in some super-risky ventures like Genting. (Yes, there are ventures more risky than cruise ship operation.) Their ships are not obsolete. And in our opinion, Celebrity offers the most “bang for the buck”in the industry. 
 

We too have avoided booking Celebrity cruises during this mess, but not because of fear of bankruptcy. Instead we are wary due to missed ports, cancelled cruises, shortened cruises, constant testing, in-port restrictions, unreliable air service, and related hassles. And of course, the possibility of getting sick thousands of miles from home, even though we are triple vaccinated. Hope this mess is over soon!

Edited January 26, 2022 by Dolebludger

[glmacruise]

On 1/25/2022 at 4:33 PM, sayvan said:

No need to give notice… bye… 

No need for you to comment like that. 

[glmacruise]

On 1/25/2022 at 4:43 PM, phoenix_dream said:

Good for you. Many of us have many cruises already booked and already fully paid due to lift and shift.  Can't cancel and get a refund. Only FCC

Well we did a dispute with our credit card company and explained it. Other than the no refundable deposit we got it back. People need to start challenging these cruise lines with their rapidly changing rules. 
 

they can’t keep promising future cruise credit like that with minimal choices.

Edited February 2, 2022 by glmacruise

[sayvan]

47 minutes ago, glmacruise said:

No need for you to comment like that. 

I just did… you obviously have an axe to grind… bye.. 

[kearney]

One reason I don't purchase travel insurance through the cruise line and make sure coverage for bankruptcies. I also try to hold off final payment...but with several cruises now rescheduled in the future.. I have a bit more cash at risk... Candidly I am more concerned that they will still require masking indoors in April...  I love cruising but that requirement is making a condo at Hilton Head or other less restrictive place seem more appealing than in the past 

[graphicguy]

Admittedly, I've only skimmed some of the terms issued as Celebrity/Royal reworked their finances.  But, the one thing that struck me about what I did read, the reworked finances were all geared towards long term planning and the likely possible set backs.

 

Crystal and their parent have assets that are much less attractive than Celebrity Royal.  Plus, the mere fact that they couldn't pay their fuel bill tells us they've been in much deeper financial woes and for much longer than Celebrity, Royal, Carnival, Norwegian, MSC, etc.

 

Crystal is an anomaly and certainly not the norm in the industry.