CCL High Debt /what is Your Opinion

[mcrcruiser]

9 hours ago, ldtr said:

I would expect them to use deposits where it makes the most sense.  Deposits are not held in an escrow account and they never have.  There is also no law telling them how they manage the cash.

 

Look for example at any of the filings for 2019.  Compare the amount of cash on hand to the customer deposits balance.  The cash was usually about 3 billion or so while the customer deposits was around 7 billion.  That other 4 billion was helping to fund new ships.

 

That was one of the reason why they had such a problem when Covid forced them to shutdown.  Because they had a deposits balance that exceeded their cash on hand.  One of the reasons for going the FCC route instead of refunds where they could.

 

Not a problem as long as there is not another shutdown.  New deposits come in and add to the balance in that account, cruises are taken and subtract from it.  As long as business is rather constant no problem, the value of the account stays pretty constant and no draw on that cash so it can be used.  It basically gives the cruise lines an amount of cash that is equal to 1/4 of their annual revenue that is pretty constant.  They would be crazy not to take 60-70% of it and apply it to high interest debt to lower expenses.  Same with all of the cruise lines.

 

Viking on the other hand requires full payment a year out, or 6 months if you book while on board a Viking cruise.  That gives them between 50-75% of their annual revenue in cash that they can use to help fund the building of more ships.

What you say seems logical .  Still what happens should the US & other countries fall into a recession this  year ? Cruise lines do not do well when there are recessions ;because of big layoffs & other financial factors.  Our economy has not seen higher interest rates along with higher prices since the presidency of Jimmy Carter, more than 40 years ago

 

 Mt immediate concern is how much cash I would have out  with deposits . Example a cruise  under $6000   HAL wants $1200 deposit . close to 25% of the cruise fare . That is too high imo & hurts bookings 

[Mary229]

@mcrcruiser  we keep telling you to use future cruise deposits😉.  It is the only way I book. Regardless of a company’s financial condition I don’t like to float them loans. 

Edited June 30, 2023 by Mary229

[mcrcruiser]

7 minutes ago, Mary229 said:

@mcrcruiser  we keep telling you to use future cruise credits😉.  It is the only way I book. Regardless of a company’s financial condition I don’t like to float them loans. 

 Hi Mary ,A person has to have a  FCC to use for a deposit .In the case of a new cruise we do not have FCCs to use . What this does do is alert people to what cruise lines will do with their deposits  .If people reject paying such high percentages like we just did  00a #1200 deposit against a cruise cost between $5000 to $5000 & so far in advance like 1.5   years ( HAL's handicap cabins are scarce )

 

   Now I get what you are referring to is the $100 deposits you get aboard one of HALs ships to use as a FCC deposit ,Ah that makes sense .not onlt get that but added  OBCs  .So we would wait now until we board koningsfam in Jan 2024 ,then  but our FCCs  on that cruise .We normally have a electric scooter that can only fit  into a full on handicap stateroom because of the door width & the  need to be able to tuen the scooter around to fo back out , 

 

 Now we are thinking with the help of a local gym we can use a big wheel walker & book into a regular balcony cabin .We have a rollator which is big wheels stand up straight with 2 breaks on both handles & a seat & water cup holder  .We can take that onto a tender as well  .so we do have a out for a standard balcony size cabin

[mcrcruiser]

Has any one been tracking the rise in CCL stock value, just looked $19.25 per share  . .We still have shares that we picked up below $10 .Question is how long can this ride last 😄

[HappyInVan]

14 hours ago, mcrcruiser said:

Today June 29th I read on the business fpr CCL stock that Carnival   corp has used deposit monies to pay down  $1,000,000,000.00   in debt  .We thought that was illegal to use deposit money the cruise line has yet to earn to pay down  debt 

 

 

Companies don't have to 'segregate' customer deposits unless the law requires it. Lawyers are supposed to place client monies in a trust account. Brokeage houses aggregate client assets and register CCL stock (for example) under their name. But, their internal accounts MUST clearly separate client assets from proprietary assets (trading done by the brokerage house's employees).

 

I've been saying that CCL (and the other companies) are still high risk (post 196). Their losses during the pandemic has been vast, and the amount of borrowing has been prodigious.

 

Some optimists might think that CCL will be able to repay the loans at 100% occupancy. Unfortunately, the reality is that the cruise industry still has excess capacity. Difficult to raise fares when Princess is still promoting '00s of cruise at $100/day + $500 OBC' for new bookings.

 

The grim reality for mainstream companies is that cruise pax have a limited budget to spend. See post 221, total revenue per pax day has been flat since 2013. During the pandemic, low cruise fares were offset by higher onboard spending. The cruise industry had done a good job of persuading pax to spend more on onboard spending.

 

But, you can't squeeze blood from stone. Recent attempts by cruise companies to raise fares have been futile. Higher fares = lower onboard spending. Yet, costs per pax are up despite cost cutting and efficiencies.

 

Then, there's the looming recession. At a prime rate of 9%, or higher, there's bound to be a reduction of demand for cruise/leisure spending.

 

That's why there's so much interest in the high end. The pax have surplus funds. It doesn't make much of a difference whether the fare is $1k/day or $1,200/day.

 

HAL is fortunate in that its pax are older. They have savings to spend. They don't have to worry about surges in the cost of rent or mortgages.

 

[Mary229]

15 minutes ago, mcrcruiser said:

 Hi Mary ,A person has to have a  FCC to use for a deposit .In the case of a new cruise we do not have FCCs to use . What this does do is alert people to what cruise lines will do with their deposits  .If people reject paying such high percentages like we just did  00a #1200 deposit against a cruise cost between $5000 to $5000 & so far in advance like 1.5   years ( HAL's handicap cabins are scarce )

 

   Now I get what you are referring to is the $100 deposits you get aboard one of HALs ships to use as a FCC deposit ,Ah that makes sense .not onlt get that but added  OBCs  .So we would wait now until we board koningsfam in Jan 2024 ,then  but our FCCs  on that cruise .We normally have a electric scooter that can only fit  into a full on handicap stateroom because of the door width & the  need to be able to tuen the scooter around to fo back out , 

 

 Now we are thinking with the help of a local gym we can use a big wheel walker & book into a regular balcony cabin .We have a rollator which is big wheels stand up straight with 2 breaks on both handles & a seat & water cup holder  .We can take that onto a tender as well  .so we do have a out for a standard balcony size cabin

Yes, I corrected my typo, FCD.   It is the only way I have sailed for years.  Outfits that require a full fare a year in advance leave me suspicious.  I am not in the habit of floating major corporations large sums of money. I only put down what I can afford to lose.  Right now I am twisting in the wind about an airfare that is going to cost me a bundle up front.   

[HappyInVan]

1 hour ago, ldtr said:

You stated Majestic in post 243. 

 

Actually I had a reference just could not share it in public which would make a portion of a commercial report part of the public domain, not allowed underarms and conditions.

 

Atleast I don't talk about the environment on a cruise line  I have never been on.

 

Clearly, you're not as familiar with the Princess ships as you like to think you are!!! Currently, the company operates 3 classes of ships, with the Royal series being the latest. HAL operates 4 classes; with the oldest remaining ships being the R class.

 

https://en.wikipedia.org/wiki/Princess_Cruises#Current_fleet

 

Personally, if you haven't actually read the document, then all you have is hearsay. That's common in this forum but has no credibility with me.

 

IMO, its suspicious that no one else has quoted the report. Usually, some blogger or media will reference a substantial newsworthy report

 

BTW, I don't have to actually cruise on Princess, in order to understand the purpose of a design!

 

Hope this helps.

 

[HappyInVan]

2 hours ago, Ride-The-Waves said:

Last two cruises, a TA on Princess and a canal transit on HAL, the preponderance of walkers and scooters was on Princess...

 

 

What ships were those? I would compare oranges with oranges. The oldsters would prefer the smaller ships. Less rush-rush and distance to walk. HAL's oldest loyalists still love the Prinsendam. 

 

Future Princess ships are both 175k GT. I can't imagine that they intend to fill those ships with seniors. Though some seniors will enjoy the zip lines and the slides. Banzai!!!

 

https://en.wikipedia.org/wiki/Princess_Cruises#Future_fleet

[mcrcruiser]

3 hours ago, Mary229 said:

Yes, I corrected my typo, FCD.   It is the only way I have sailed for years.  Outfits that require a full fare a year in advance leave me suspicious.  I am not in the habit of floating major corporations large sums of money. I only put down what I can afford to lose.  Right now I am twisting in the wind about an airfare that is going to cost me a bundle up front.   

Mary try the pointsguy.com for ideas about how to bring down airfares .Best people we know for getting best prices & credit card info /deals  .Yes we agree use the $100 FCD method   .We will do that  when we book on a HAL ship & get a 2nd set for future use.Thanks

Edited June 30, 2023 by mcrcruiser

[rodndonna]

I can't say I've been following this thread, and hate to be the bearer of good news, but had to pop on to here to say CCL has been on a tear!

 

https://www.investors.com/news/composite-rating-for-carnival-adr-jumps-to-96/

 

And up another 9% today!

 

 

[mcrcruiser]

11 minutes ago, rodndonna said:

I can't say I've been following this thread, and hate to be the bearer of good news, but had to pop on to here to say CCL has been on a tear!

 

https://www.investors.com/news/composite-rating-for-carnival-adr-jumps-to-96/

 

And up another 9% today!

 

 

Yes CCL is doing very well now ;but ,they are still not producing positive cash flow  .Unfortunately ,the FED plans to have 2 mote interest rate increase & that alone makes the carnival heavy debt more expensive when they have to go out to renegotiate the percent they will  meed to pay at that time .It may be a lot different than the 10% .That news woud not drive the stock price higher but much lower .

 

To the above ,add on the real probability that the US economy is headed into recession .Cruise lines do not do well in recessions 

 So fraw your own conclusion .I would have percent stop losses   under the price now good to cancelled ,That way you don't loose all your profits or more .Then there is the possibility that a stock can open below the sop loss .The only real security then & now is to buy puts against your position .That is the real insurance so to speak 

[rodndonna]

2 minutes ago, mcrcruiser said:

Yes CCL is doing very well now ;but ,they are still not producing positive cash flow  .Unfortunately ,the FED plans to have 2 mote interest rate increase & that alone makes the carnival heavy debt more expensive when they have to go out to renegotiate the percent they will  meed to pay at that time .It may be a lot different than the 10% .That news woud not drive the stock price higher but much lower .

 

To the above ,add on the real probability that the US economy is headed into recession .Cruise lines do not do well in recessions 

 So fraw your own conclusion .I would have percent stop losses   under the price now good to cancelled ,That way you don't loose all your profits or more .Then there is the possibility that a stock can open below the sop loss .The only real security then & now is to buy puts against your position .That is the real insurance so to speak 

 

I actually don't have any investment interest n CCL (beyond the 100 shareholder benefit) so just hoping they survive is my goal 😎

[mcrcruiser]

24 minutes ago, rodndonna said:

 

I actually don't have any investment interest n CCL (beyond the 100 shareholder benefit) so just hoping they survive is my goal 😎

understood  .Still now you have over $1800  invested  .you should look into  what a put would cost you(insurance) .all you need to design is the time ,sell price  .If you are working with a full time broker they can place  a  pit for you  ,Remember all you are doing is insuring  your stock or you simply place a percent stop loss that you want not to loose any   more on the  downside  . place it good to cancelled & walla you protect .The difference between the 2 is the put guarantees your money v,The stop loss percentage only stops in a normal market but ma stock could actually open below your stop loss percentage  ,that is the danger of that free play 

 

 I started buying the CCL in the $7 up to $16 . I feel now the stock is not worth this price & other  pros agree .The danger  with CCL  is the debt , higher costs of money  (debt servicing ) &   probability of a recession  starting some time this year

 

 100 shares is not a huge investment depending at what price you paid . Still it is money & the OBCs some times don't justify the risk  .

 

 More people who but the stock for the  OBC carrot  should be watchful 

 Cliff

 

   

[Guest ldtr]

5 hours ago, HappyInVan said:

 

Clearly, you're not as familiar with the Princess ships as you like to think you are!!! Currently, the company operates 3 classes of ships, with the Royal series being the latest. HAL operates 4 classes; with the oldest remaining ships being the R class.

 

https://en.wikipedia.org/wiki/Princess_Cruises#Current_fleet

 

Personally, if you haven't actually read the document, then all you have is hearsay. That's common in this forum but has no credibility with me.

 

IMO, its suspicious that no one else has quoted the report. Usually, some blogger or media will reference a substantial newsworthy report

 

BTW, I don't have to actually cruise on Princess, in order to understand the purpose of a design!

 

Hope this helps.

 

Too funny.  Since you were comparing the latest design of the Princess ships currently sailing, So I compared it to the latest HAL ship currently sailing.

 

Actually Princess is still sailing the two smaller Coral and Island ships.  They are panamax ships and are now the smallest of the Princess fleet. They are generally used for Panama Canal cruises and the two world cruises that Princess runs each year (the Coral starting in Australia and the Island starting in the US). The Grand class is actually 3 different subclasses on the same basic foot print.  The major differences of the 3 Grand subclasses are passenger capacity.  The internal layout of deck 5,6,7 and Lido is basically the same.  The Coral and Island are a little different in how the dining rooms are setup, On the Grand and Royal class the mid ship dining rooms are large with two entry points on the Coral and the Island they are split in to separate dining rooms.  Also they removed one of the entertainment venues from the Island to put more cabins on board so it has a bit more crowded feel. 

 

Personally I have been on every Princess ships currently sailing except the Island, the Sky, and the Enchanted. Will be on the Island going to the North Cape og Norway in October. With HAL I have sailed on a little over  half of their  current fleet including the Noordam, Zaandam, Westerdam, Eurodam, Veendam, and Konnigsdam

 

Personally I have read the document.  I am bound by the terms and conditions under which I was given access.

 

That document was from 2020 based upon 2019 data.  Back before 2019 it was relatively easy to get specifics on average age on cruise lines.  They were posted on several web sites Frommers had numbers of all of the major lines for example.  Then the cruise lines decided that the age of their passengers was an important piece of data.  Celebrity stopped publishing, now other cruise lines have followed.  As a result you get qualitative data not exact numbers.

 

For example back in 2018 you could find data like this, which unfortunately does not list Princess in this comparison.   

 

https://blog.cruise1st.co.uk/cruise-holidays/how-old-is-the-average-cruise-passenger/

 

The average age of Dreamlines cruisers varies by cruise line. Dreamlines’ most popular booked cruise line, MSC, has an average passenger age in 2018 of 52.1 – about six years older than the industry standard. Among passengers who booked with Dreamlines, TUI and AIDA attracted a slightly older crowd – 58.5 and 54.5, respectively. Norwegian Cruise Line passengers were on average 52.5 years old, and even family-friendly Costa Cruises had an average age of 52.2.

For cruise lines that targetted families with children, the average age was noticeably lower; Carnival had an average age of 44.9, and Royal Caribbean passengers had an average age of 48.8. The cruise lines that attracted the oldest passengers were mostly river cruise lines.

Among major ocean cruise lines, Holland America Line also attracted an older passenger base, with an average age of 64. The luxury brand, Oceania Cruises, had an average age of 64.1. Cunard cruises, however, had an average age of just 60.5 due to its specialisation in traditional cruising. Ultra-luxury brands also catered to an older crowd, with the average age of Seabourn passengers at 66.3 and Regent Seven Seas at 62.4. Silversea Cruises, however, had an average age of just 59.5.

 

These days about the only two places that have listed hard numbers are the points Guy who put Princess at 57 and HAL as being Closer to 70 (but more of a qualitative response not a quantitative response and Frommers who stated that 25% of HALs passengers are below 55 and put the average age at 57, the same place as the Points Guy puts Princess.  Unfortunately Frommer's does not list Princess.   Last year they did.  This year they do not.

 

I guess you must be both a professional ship designer and clairvoyant  to look at a picture and know exactly the intent and the atmosphere on board without ever setting foot on a cruise for that line. Too funny.  You might actually notice that none of Princesses existing fleet has water slides or zip lines.

 

You might actually want to read the stream for the Sun Princess, the new ship that launches in 2024.  Basically the comments complaining about the fact that the Sun is adding some family features that have not been traditional found on Princess ships.  They are complaining that it might, heaven forbid, bring more families on board with children.  I am pretty sure that most of those folks would also disagree with your characterization of the existing Princess ships as being "fun ships, like Carnival.

 

As I mentioned earlier the Sun, unlike the Royal class, might represent Princess's push to change demographics, just as Celebrity and HAL have done previously.  Representing a dramatic change from previous Princess practices with both expanded family friendly features and the start of a class system with portions of the ship reserved for specific cabin types.

 

You might actually try sailing on a cruise line to get a feel for what the environment is like, you might actually be more accurate than  making a judgement looking at a picture.

 

Edited June 30, 2023 by ldtr

[Gail & Marty sailing away]

1 hour ago, rodndonna said:

 

I actually don't have any investment interest n CCL (beyond the 100 shareholder benefit) so just hoping they survive is my goal 😎

Yes Yes Yes Please 

[HappyInVan]

52 minutes ago, ldtr said:

Too funny.  Since you were comparing the latest design of the Princess ships currently sailing, So I compared it to the latest HAL ship currently sailing...

 

You might actually try sailing on a cruise line to get a feel for what the environment is like, you might actually be more accurate than  making a judgement looking at a picture.

 

 

 

I do know that I won't like a 144k GT ship with a huge screen on the top deck. Much less a 175k GT ship that attracts families like RCI.

 

Its possible that you haven't travelled often enough on HAL. I really liked the ambiance of the last Rotterdam (61k GT). Here's something to note. That the smaller remaining ships in HAL's fleet tend to attract an older crowd who don't need fancy entertainment. On the other hand, the Pinnacle class ships do tend to attract a younger demographic; that is fewer wheelchairs and walkers. 

 

Here's the interesting thing when you compare HAL to Princess. The largest HAL ships are similar in size to the smallest Princess  ships (Panamax 91k GT). So, it would be a mistake to compare a count of wheelchairs between the largest HAL ships with the smallest oldest Princess ships.

 

Like I said, compare oranges to oranges.

 

As for your purported document, you've read it? Then, you must have noted the source for those numbers. Was it a poll? Was it from an industry research paper? Yes, the source matters as much as the conclusions.

 

Frankly, I would rather trust the bloggers who are in continuous contact with cruise company . executives. They get tidbits, and they have a proper context for the numbers.

 

Hope this helps. 😄

[Guest ldtr]

1 hour ago, HappyInVan said:

 

 

I do know that I won't like a 144k GT ship with a huge screen on the top deck. Much less a 175k GT ship that attracts families like RCI.

 

Its possible that you haven't travelled often enough on HAL. I really liked the ambiance of the last Rotterdam (61k GT). Here's something to note. That the smaller remaining ships in HAL's fleet tend to attract an older crowd who don't need fancy entertainment. On the other hand, the Pinnacle class ships do tend to attract a younger demographic; that is fewer wheelchairs and walkers. 

 

Here's the interesting thing when you compare HAL to Princess. The largest HAL ships are similar in size to the smallest Princess  ships (Panamax 91k GT). So, it would be a mistake to compare a count of wheelchairs between the largest HAL ships with the smallest oldest Princess ships.

 

Like I said, compare oranges to oranges.

 

As for your purported document, you've read it? Then, you must have noted the source for those numbers. Was it a poll? Was it from an industry research paper? Yes, the source matters as much as the conclusions.

 

Frankly, I would rather trust the bloggers who are in continuous contact with cruise company . executives. They get tidbits, and they have a proper context for the numbers.

 

Hope this helps. 😄

I posted the company that produced the report.

 

Hope this helps.

[jthek]

With strong revenues, they should be paying off some debt early

I had 100 shares at $39

I started buying when it went below $8

and now have 1300 shares at $9.90

 

It may not get back to $60 and paying a dividend anytime 

soon, but I like the current situation

 

Strong revenues fix a lot of problems

[Ride-The-Waves]

On 6/30/2023 at 9:33 AM, mcrcruiser said:

  Our economy has not seen higher interest rates along with higher prices since the presidency of Jimmy Carter, more than 40 years ago

Reagan 1983 the rate was highest at 15.8%.

[mcrcruiser]

13 minutes ago, Ride-The-Waves said:

Reagan 1983 the rate was highest at 15.8%.

We don't recall the inflation being the way it is today during the Reagan presidency years   ;vut ,we do remember the Carter years & also alternate days getting gas based on odd & even license plate numbers . Right now I expect cruise prices to continue to go higher because of food & energy costs plus pressure on salaries to keep up with inflation .fir us  retired folk that is a bad scenario   .Also ,a recession may not happen this year but the economists are now saying in early 2024 ;as the Fed rate increases are felt through  out the economy   

 With enough capital ,we older people survive with higher Fed bond interest & better market returns

 Still CCL is a precarious stock to won too many shares because as  the  interest rates continue to rice so does the demand on their cash to pay off higher debt interest

[Guest ldtr]

4 hours ago, Ride-The-Waves said:

Reagan 1983 the rate was highest at 15.8%.

The fed funds rate was higher in 96, 97, 98 and 2000 then it is today, as well.

[jthek]

If they weren't getting record revenues

I would be worried

[BermudaBound2014]

17 minutes ago, jthek said:

If they weren't getting record revenues

I would be worried

 

Record revenue is offset by record cost. 

[HappyInVan]

37 minutes ago, jthek said:

If they weren't getting record revenues

I would be worried

 

Sorry, is that really true?

 

Looking at the quarter and half year just ended, revenues were flat compared to 2019.

 

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

 

For 2019, the respective $$$ were $4.8b (Q2) and $9.5b (1^st Half). For 2023, the $$$ were $4.9b and $9.4b respectively.

 

There have been wild speculation that fares are rising. But, post 221 shows that revenue per cruise day have been flat since 2013. Currently, the industry remains highly competitive with Princess (for example) offering '00s of cruises at $100/day + $500 OBC'.

 

FYI, first half occupancy was 105% in 2019 and 2018, versus 95% in 2023. CCL is hoping that full year occupancy would be 100% for 2023. That means that second half occupancy has to be 105%.

 

Hope this helps.

 

[Guest ldtr]

1 hour ago, HappyInVan said:

 

Sorry, is that really true?

 

Looking at the quarter and half year just ended, revenues were flat compared to 2019.

 

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

 

For 2019, the respective $$$ were $4.8b (Q2) and $9.5b (1^st Half). For 2023, the $$$ were $4.9b and $9.4b respectively.

 

There have been wild speculation that fares are rising. But, post 221 shows that revenue per cruise day have been flat since 2013. Currently, the industry remains highly competitive with Princess (for example) offering '00s of cruises at $100/day + $500 OBC'.

 

FYI, first half occupancy was 105% in 2019 and 2018, versus 95% in 2023. CCL is hoping that full year occupancy would be 100% for 2023. That means that second half occupancy has to be 105%.

 

Hope this helps.

 

The pricing has been flat because of a few different reasons 

 

1. Cruise lines have traditionally had limited pricing power because their competition is the entire cruise industry not just other cruise lines.

 

2. Even more important during that period they were largely focused on growing capacity and filling all of that new capacity so they were able to increase revenue and profitability by building more and larger ships.  The industry for that period was driven by overall market expansion more than per passenger revenue.

 

The situation is a bit different. Even though CCL still has more capacity than in 2019 it will be limited in such growth for several years.

 

You now have a time when the entire rest of the travel industry has increased prices dramatically.  As a result cruise line do have pricing power and are making use of it. First  in the on board spend categories. Cruise lines have already raised significantly. Next will be in fares. On board spend per passenger day is significantly higher than pre covid and those impacts have not fully kicked in yet.

 

Even in the premium lines you are seeing changes. An example is Oceania apparently doing away with base fares and going to more of an inclusive model, with corresponding increases.

Edited July 2, 2023 by ldtr