KABOOM!! Seabourne to Saudis?? CEO out

[BermudaBound2014]

1 hour ago, CruiserBruce said:

There are NOT more ships at sea today as opposed to prior to Covid. Many cruise lines decreased their fleets (HAL by 4 ships) and one HAL ship has not yet returned to service (Volendam). Carnival retired a number of older ships.

 

Some might say there are more BERTHs at sea, but I doubt that is true either. Yes, a small number of new ships came into service during Covid(including one by Disney today)...that may play into the "more berths" concept, but not the idea there are more ships.

 

Is there more supply than demand? It would appear so, as people are not fully comfortable sailing yet. But there is lots of indication that situation is headed towards a more favorable balance.

 

I do not believe this is accurate.

 

Sure HAL retired 4 ships (the Veendam, Maasdam, Amsterdam, and Rotterdam) for a total of approximately 5,000 passengers. You can add the Volendam to the mix and you still end up with LESS passengers than the 6,988 passenger Wonder of the Seas which debuted in March of 2022.

 

The industry is adding 48,000 berths in 2022 alone. The amount of ships retired since covid did not even come close to housing this many passengers. https://www.cruisehive.com/12-major-new-cruise-ships-arriving-in-2022/55531

 

I do agree that currently supply exceeds demand, but I'm not reading any indication that the situation is headed towards a more favorable balance, at least I'm not reading any indication that I believe. The quarterly releases are window dressing and spun in the most favorable light. Once anyone starts really digging into the financials the dire state of the industry becomes crystal clear. 

[BermudaBound2014]

4 hours ago, Hlitner said:

The question now is how will the cruise industry recover and I fear there is going to be a lot of pain before we move back to a healthy cruise and travel industry. 

 

Truer words never spoken. It's heartbreaking. 

 

4 hours ago, Hlitner said:

And for those who like to play the "blame game" perhaps they need to look inwards at their own travel/cruise and spending habits.  For those who want to help the cruise industry go book a cruise and actually go on the voyage!  

 

I've certainly never blamed the cruise industry leaders for this perfect storm, but I disagree with this statement. I love cruising, but not enough to risk the possibility of quarantine. I know others that can not cruise because they choose not to be vaccinated. Others who refuse to cruise with pre-testing in place. Others absent due to mandatory masks. The industry needs everyone back onboard. CCL sailed with a dismal 69% occupancy last quarter. They are on record saying they need 95% to turn a profit. It's bleak.

 

If I were to place blame anywhere it would be with the CDC who holds cruising to different standards. But then again, there are people who would not cruise if all CDC protocols were removed, so it appears to be a real catch 22. I just don't see how the cruise industry can win.

[CruiserBruce]

@BermudaBound2014 there is a difference between ships and berths. This is particularly important to people who want, and cruise lines who are known to provide unique routes. A 6k pax ship isn't going to many small ports in unique locations. Rather those ships will tend to stay at the huge ports.

[BermudaBound2014]

6 minutes ago, CruiserBruce said:

@BermudaBound2014 there is a difference between ships and berths. This is particularly important to people who want, and cruise lines who are known to provide unique routes. A 6k pax ship isn't going to many small ports in unique locations. Rather those ships will tend to stay at the huge ports.

 

Of course there is a difference between ships and berths :-).  I was responding to your statement that you doubt there are more berths at sea today. I believe that statement to be inaccurate. 

 

In addition, it looks like about a dozen new ships came in 2021. There are to be 12 new ships in 2022. I believe the number of ships which were actually scrapped is far lower than the number of ships that came online. 

Ships that were scrapped:  https://thepointsguy.com/guide/cruise-ships-scrapped-sold-covid/

Ships that came online in 2021: https://www.cruisecritic.com/articles.cfm?ID=5712

Ships in 2022: https://travel.usnews.com/features/best-new-cruise-ships

 

And if you look at the projected new ships in 2023 it's mind blowing.

 

With all that, I absolutely agree that it appears the cruise ships which will survive (and flourish) are those which can offer both luxury and unique locations. Which places the industry in yet another quandary because the majority of cruise ships on order do not fit this demographic. 

 

 

[HappyInVan]

MHO, CCL must start selling its brands soon. They can only start paying off their enormous debt of $30b by selling entire units/brands. Its not enough to sell a few ships.

 

Realistically, the large cruise companies can only realize a reasonable amount of value in their ships with an orderly sale of the brands+ships. Should there be a forced liquidation, there would simply be a glut in the ship market.

 

However, the sale of units does not solve the industry's over-capacity problem. It merely draws in fresh money to pay debt.

 

That's why the recent comments by Morgan Stanley etc has inspired so much fear. They're saying that the  cruise industry has reached the point of no return. We're looking at the imminent demise of large cruise companies. And, the first disaster will inspire fear among pax for the rest of the industry.

[iancal]

At the end of the day cruise conglomerate quarterly financials will tell the story.  My guess is that the cruise industry is  in for a number of successive quarters of less than stellar performance.  

 

I also believe the Morgan Stanley CCL report may cause other firms to do a similar analysis.

 

Edited June 30, 2022 by iancal

[albingirl]

10 hours ago, AFNavigator said:

It certainly builds on the image of Carnival being a rowdy spring break booze cruise crowd.  That's exactly what some prospective cruisers want...not me.  I had a guy in my office last fall that was concerned that the 15 drink "Cheers" package on his Carnival cruise was going to be inadequate.  He might think the brawl was OK.

I know I am less likely to go to places that may be trouble spots, like Carnival, Portland, Seattle, LA, and places in my country that are burning down.  Brawls on cruise ships may give some a "ho hum" pause, but for me, these are places to avoid for my safety. It's common sense.

[friendswithdave]

9 hours ago, BermudaBound2014 said:

. Once anyone starts really digging into the financials the dire state of the industry becomes crystal clear. 

Crystal clear... pun intended or not? 😅

[Tampa Girl]

12 hours ago, Mary229 said:

It is beyond me why any serious investor would give so much regard to a single analyst upgrade or downgrade.  

 

Agree!  Thank you.

[LocoLoco1]

4 minutes ago, Tampa Girl said:

 

Agree!  Thank you.

Numbers don’t lie. Big analyst firms have fleets of ‘Financial Specialists’ who pore over EVERYTHING. Their reviews are taken seriously by financiers around the World. Again, massive debt and a looming recession are beyond unkind; they could be crippling. 

[Mary229]

16 minutes ago, LocoLoco1 said:

Numbers don’t lie. Big analyst firms have fleets of ‘Financial Specialists’ who pore over EVERYTHING. Their reviews are taken seriously by financiers around the World. Again, massive debt and a looming recession are beyond unkind; they could be crippling. 

They are not always right.  Lots of hedge funds are going belly up when only last year they were the media darlings.  Do your own research, listen to solid advice - the financial press is noise and meant to bait.   I would never in my wildest dreams buy or sell based on a single analyst’s word.  MS is not special anymore than the thousands of other analysts that are publishing reports.  Many sites, including Yahoo Finance, show upgrade/downgrade/neutral calls.  You will find as many of each if you do your research and of course, all from significant and important specialists; WTH that is.    Much of what some thoughtful  people in this forum have said it true but those folks are not asking you to view it as investment advice. 
 

BTW, if you are interested you can pore over everything.  Everything is available at the SEC website.  

[LocoLoco1]

I couldn’t agree more. CCL is at $8/bucks and change and not $25 for a reason. 

[Mosaic]

2 hours ago, albingirl said:

I know I am less likely to go to places that may be trouble spots, like Carnival, Portland, Seattle, LA, and places in my country that are burning down.  Brawls on cruise ships may give some a "ho hum" pause, but for me, these are places to avoid for my safety. It's common sense.

We are avoiding Florida, for the most part.

[BermudaBound2014]

3 minutes ago, Mary229 said:

I would never in my wildest dreams buy or sell based on a single analyst’s word.  

 

BTW, if you are interested you can pore over everything.  Everything is available at the SEC website.  

 

I'm no longer sure any amount analysts can be trusted. It is clear to me that the market is manipulated. As you say, the numbers are all available. Here's a good start for anyone interested:

https://www.carnivalcorp.com/financial-information/quarterly-and-semiannual-reports

 

BTW, CCL just hit another 52 week low this morning. Current trading at 8.24 (but it's early).  

 

IMO we will see 7's. 

[Mary229]

2 minutes ago, BermudaBound2014 said:

I'm no longer sure any amount analysts can be trusted

I obviously don’t trust them.  They are selling a product.  Sometimes it is because they own stock, sometimes because their firm owns puts, sometimes because they are financing the debt.  They are NOT disinterested parties. 

Edited June 30, 2022 by Mary229

[cruisemom42]

11 hours ago, CruiserBruce said:

@BermudaBound2014 there is a difference between ships and berths. This is particularly important to people who want, and cruise lines who are known to provide unique routes. A 6k pax ship isn't going to many small ports in unique locations. Rather those ships will tend to stay at the huge ports.

 

10 hours ago, BermudaBound2014 said:

 

Of course there is a difference between ships and berths :-).  I was responding to your statement that you doubt there are more berths at sea today. I believe that statement to be inaccurate. 

 

In addition, it looks like about a dozen new ships came in 2021. There are to be 12 new ships in 2022. I believe the number of ships which were actually scrapped is far lower than the number of ships that came online. 

 

 

It's worth remembering that not all of the ships that left fleets were scrapped. Two of HAL's older ships are still sailing under the Fred. Olsen brand for example, and the small ex-Renaissance ship formerly owned by Princess is now in Azamara's fleet.

 

I do agree that overall there are more berths to be filled now in an industry that for years has told us they need to be at or even above "capacity" to be profitable....

 

I think the viewpoints of many here are much more pro-cruise than the normal public. I have any number of casual acquaintances and co-workers who would not consider a cruise at this time. And the industry also depends to an extent on new cruisers (who spend more $$ per cuise) than past-passengers. I haven't seen numbers but would guess they are seeing far newer passengers "new to cruising" right now.

[HappyInVan]

6 minutes ago, Mary229 said:

I obviously don’t trust them.  They are selling a product.  Sometimes it is because they own stock, sometimes because their firm owns puts, sometimes because they are financing the debt.  They are NOT disinterested parties. 

 

FYI, Morgan Stanley is a large organization with 75k employees. The analysts are in different departments from the portfolio managers and wealth advisors. I'm sure that their remuneration is based on different criterion from the decision makers and managers.

 

https://www.theofficialboard.com/org-chart/morgan-stanley-investment-management

 

Among the managers, some will be long and some may be bearish. The company is a big player in the issuance of new securities. So, there may be important feedback from the securities market to the analysts and managers. 

[Mary229]

10 minutes ago, HappyInVan said:

 

FYI, Morgan Stanley is a large organization with 75k employees. The analysts are in different departments from the portfolio managers and wealth advisors. I'm sure that their remuneration is based on different criterion from the decision makers and managers.

 

https://www.theofficialboard.com/org-chart/morgan-stanley-investment-management

 

Among the managers, some will be long and some may be bearish. The company is a big player in the issuance of new securities. So, there may be important feedback from the securities market to the analysts and managers. 

🤣🤣🤣🤣🤣

[iancal]

The interest rate that Carnival Corp is paying on new long term debt is a very good indicator of the risk factor that the financial community/lenders place on Carnival Corp or on any other business for that matter  My understanding is that it is currently just over ten points.

 

We are not cruising at the moment.  In the past we have done mostly last minute cruises as part of an extended land trip.  One way of judging demand on all of the mass market cruise lines is to take a look at price drops 45 days and closer in to sailing dates. 

 

Not only prices, but cabin availability.  We buy balcony cabins.  We get a sense of how well a ship is selling by the availability of those balcony cabins, whether or not they are only gtys vs specific cats, and the price. 

 

The cruise lines can put out as many upbeat PR statements as they want.  The financial analysts can do their thing. 

 

The answer is in the numbers.  They are not difficult to discern.  Quarterly losses or profit.  Cash flow/burn rate.  Cash or cash equiv. on hand.  Assumption of debt and the interest rate attached.  Share dilution.  And others. The share price is in part a reflection of this, as are the analysts projections/recommendations.

 

This is not about emotion or how one may feel attached to one of the Carnival brands.  It is about numbers and financial forecasts.

Edited June 30, 2022 by iancal

[albingirl]

3 hours ago, Mosaic said:

We are avoiding Florida, for the most part.

haha, there's always someone who says they hate Florida.  Whatever the reason.  Taken with a grain of salt.  

[gilboman]

18 hours ago, Hlitner said:

So we go back to our Econ 101 Class :).  There is a well established economic theorem called "price elasticity."  The concept is actually very simply and expressed (in math terms) how much one can increased prices before folks simply say "no" and take their business elsewhere.  Right now, most cruise ships are operating at a fraction of their capacity with many vessels only selling about 60% (give or take) of their berths.  We know this by simply following many of the CC blogs.  Adding a fuel surcharge is certainly not going to help fill ships and may well drive away enough business to actually contribute to greater losses.  

 

We have noticed some pretty hefty price increases with several lines that we routinely monitor.  Consider that MSC's Yacht Club cost about $300 per passenger day (pre COVID) and is now generally selling at over $400 per passenger day.  Look at the Retreat suites of Celebrity and you will get sticker shock (ultra luxury lines are often less expensive).  I think the cruise lines are testing price increases and it will be interesting to see if those increases hold, or if the lines are forced to go back to some of their old strategies including quietly marketing last minute bargain fares.  

 

Hank

i generally agree with your thoughts but i think the sailing below capacity is more of lack of staff. basically the cap on the boat instead of 100% is in reality more like 70% (or w/e, just well under 100%), so they price their voyages and adjust the pricing with the capacity as if full was 70% because there's no point selling more cabins than they can handle and leaving $$ on the table 

[gilboman]

6 hours ago, albingirl said:

I know I am less likely to go to places that may be trouble spots, like Carnival, Portland, Seattle, LA, and places in my country that are burning down.  Brawls on cruise ships may give some a "ho hum" pause, but for me, these are places to avoid for my safety. It's common sense.

ya..definitely avoid the US where possible and especially florida and texas even moreso now than before

 

stick with MA and NY and WA for cruising to avoid the issues in florida and texas etc

[Sir PMP]

22 minutes ago, gilboman said:

ya..definitely avoid the US where possible and especially florida and texas even moreso now than before

 

stick with MA and NY and WA for cruising to avoid the issues in florida and texas etc

NY and WA are the last places I would waste my time in.

[Sir PMP]

1 hour ago, albingirl said:

haha, there's always someone who says they hate Florida.  Whatever the reason.  Taken with a grain of salt.  

Just let them, we're doing good.

[gilboman]

7 minutes ago, Sir PMP said:

NY and WA are the last places I would waste my time in.

well...florida man is best confined to florida