RCI Outlook For 2009 and Beyond

[Gonzo70]

RCI has a long way to go before bankruptcy. Remember, the executives at RCI have probably planned for this economic downtown and have cash on hand to continue operation until we get thru this recession.

 

I am not sure how you would know they have a "long way to go before bankruptcy." They did not do a good job planning for this economic turndown - they have obligations to take delivery of several large new ships from '09-'11. That is not planning for a turndown, that is planning for a hot economy. They do not have significant cash reserves - they have massive debt that far exceeds the value of the company. I am certainly not saying they are headed for bankruptcy, but that is a realistic concern. I am do not know how anybody can say it is a longshot.

[sandrapisc]

OMG, I don't like this thread.:eek:

 

Hang on RCCL, I want to be on the Oasis next July.

[Schplinky]

I'm not an American so I don't know how your rules work. If a company slips into chapter 11, how long do they have to emerge?

[Gonzo70]

I'm not an American so I don't know how your rules work. If a company slips into chapter 11, how long do they have to emerge?

 

Good question, I am not sure. Would RCL fall under the jurisidiction of U.S. bankruptcy law though? I know they have a headquarters in Miami, FL but they are not actually a U.S. company.

[sandrapisc]

Also, what I don't get is if they are doing so poorly, why when I called 2 weeks ago to check prices for Oasis (hoping to get my sister & fam on), did they tell me the prices went up? At least for an OS, which we are booked in!!!!

 

Prices went up?:confused:

[shaggyofwv]

I agree they should have steered clear of the super Mega sized ships. Those are tough to fill. I just hope things get better for everything from home sales, job market and the travel industry. And I'm afraid to think of what ziggypup posted. What happens if they declare bankruptcy while you are right in the middle of a cruise? Very scary.:eek:

 

 

That is nothing to be concerned about. Just because they declared bankruptcy doesn't mean that they would cease operations. That would only happen if they were to liquidate and they aren't in that poor of a financial position.

Under Chapter 11 a company will continue business as usual while trying to negotiate with their creditors.

[Schplinky]

Good question, I am not sure. Would RCL fall under the jurisidiction of U.S. bankruptcy law though? I know they have a headquarters in Miami, FL but they are not actually a U.S. company.

 

 

Good point, too. I imagine that they are financed by a separate holding company that might be based in Miami.

 

Money is complicated!

 

I still think that cruising is different than a lot of things. Las Vegas is in deep trouble, too (we reserved for the entire 4 days weekend next month for what the Venetian used to charge for one night), but at least there are quite a few huge corporations with deep pockets that could buy any of the mega casinos if they fell. I just don't see many other cruise companies with such deep pockets. I doubt Carnival would want the product but who knows?

[Islandbear]

The biggest problem with RCL going into bankruptcy would be that it would be unable to finance the Oasis and six othe ships it has ordered.

 

Bankruptcy would allow the company to continue to operate as long as its buisness plan was approved by the bankrutcy court. But suppliers would most likely stop extending credit to them. Think no fuel, no food, and OMG NO ALCOHOL! :eek:

[Schplinky]

The biggest problem with RCL going into bankruptcy would be that it would be unable to finance the Oasis and six othe ships it has ordered.

 

 

 

Six other?

 

I know about the Allure and the 4 remaining Solstice class ships for Celebrity (3 of which are already fully financed) but what is the 6th?

[Gonzo70]

The biggest problem with RCL going into bankruptcy would be that it would be unable to finance the Oasis and six othe ships it has ordered.

 

Bankruptcy would allow the company to continue to operate as long as its buisness plan was approved by the bankrutcy court. But suppliers would most likely stop extending credit to them. Think no fuel, no food, and OMG NO ALCOHOL! :eek:

 

Uh, no. The airlines still managed to procure fuel while operating during bankruptcy. If RCL continued to operate during bankruptcy (which it most likely would) passengers likely would not notice any significant changes during a cruise.

[Cruiser Forever]

Wow...I guess that's why Royal is sending so many ships over to Europe.

 

We'll postpone that dental work (hate dentists anyway), drive our old cars until they die, live on macaronni and cheese and put every spare dollar into our cruise accounts (oh come on...you know you have one!) to make SURE we can cruise every year!!!

 

Yes I admit it I do have a CRUISE ONLY Vacation account. And I save every week. Sometimes more $ than the previous week, but I do put something into the account. It does add up. I pretend it is a bill that has to be paid. As for dentists, I hate them too. LOL So I save on eating out too. Instead of 2 dys a week only once a week.:)

 

As for the Europe destination that is my personal favorite so the more ships there the better the choice.

[Cruiser Forever]

That is nothing to be concerned about. Just because they declared bankruptcy doesn't mean that they would cease operations. That would only happen if they were to liquidate and they aren't in that poor of a financial position.

Under Chapter 11 a company will continue business as usual while trying to negotiate with their creditors.

 

I so hope you are right. I still think cruising is the best way to travel and get your money's worth. So long live RCI and the cruise industry. :D

[DireMongoose]

They are forecasting a loss in 1st quarter '09.

 

That being said... there are still a lot of companies doing worse than Royal is now. Their stock took an incredible beating, but I think it's going to turn around. A halfway decent marketing campaign around the Oasis launch (granted, I wouldn't say that the Nation of Why Not campaign qualifies as one) would just be so big, and would especially stand out in a climate where other lines and vacation options are cutting back.

[Schplinky]

Yes. RCL has crawled out of its $5 a share hole and is up to $8.80 as I type this. They have a long way to go but things seem headed in the right direction.

[Islandbear]

It's stock is up over 7.25% today! :)

[GXmanDC]

The biggest problem with RCL going into bankruptcy would be that it would be unable to finance the Oasis and six othe ships it has ordered.

 

Bankruptcy would allow the company to continue to operate as long as its buisness plan was approved by the bankrutcy court. But suppliers would most likely stop extending credit to them. Think no fuel, no food, and OMG NO ALCOHOL! :eek:

 

Most companies that file to reorganize pre-arrange financing that is delivered immediately after the filing. Filing Chap. 11 Bankruptcy can actually open up credit while the company sorts outs its obligations.

[Debde]

The funny thing about reading this thread and this entire website is;

everytime RCCL adjusts to the economic pinch, trying to save money to get through-some threads burst into the 'how dare they'.

 

Correct me if I'm wrong-two threads were multi pages gripping about no more chocolates and no more vitality program.:rolleyes:

As any huge corporation today-RCCL will have to make cutbacks and changes to weather this economic storm.

 

Problem is with some on this bb-'if they take it away-I'm going to another cruise line.' I'm thinking lots of folks are going to go to other cruise lines as this economy will be bleak for quite sometime and you have only seen the icing on the cake of cutbacks and changes.

 

Those figures quoted earlier in this thread are not good. Not the end of the road for RCCL but not good. Lots of re-organizing will be ahead so the chapter 11 option does not have to come into play. Also-up or not-$7.25 stock number for a corporation of this size is not good either IMO-

 

The best-anyone can do for a company going through bad times is stick with them through thick and thin to help enssure it continues. Give up the little things for a while and be there still-when those little things make a re-appearance. You-as a consumer could be awarded ten fold for that. RCCL would not be the first mega company to do a complete overhaul and change its target market.

[FLACRUISER99]

The funny thing about reading this thread and this entire website is;

everytime RCCL adjusts to the economic pinch, trying to save money to get through-some threads burst into the 'how dare they'.

 

Correct me if I'm wrong-two threads were multi pages gripping about no more chocolates and no more vitality program.:rolleyes:

If this is going to keep them out of CH. 11 they are in worst shape then I ever thought. Its just a ploy by some bean counter that thinks saving 5 or 10 cents a day is more important than pissing everyone off.

[Debde]

Those were intended to be very small examples. Not to put them far away from chapter 11. They were an example of how a small cutback generated multi page responses.

I'll predict bigger cutbacks to come!:eek:

 

Point being-if a 5 cent piece of chocolate can get everyone enflamed-What would real cutbacks actually intending to keep any business out of chapter 11 do to this bb :eek: :eek:

 

Also-I'd bet we'd all be surprised how much could be saved from getting rid of the chocolate!!!;)

[cruzeluvr]

What happens if they declare bankruptcy while you are right in the middle of a cruise?

 

There have been times when people were left in port and the ship took off when this happened. I think it was Costa that had this happen.

 

Actually, I think it was Premier Cruise Lines several years ago (2000?). If I recall correctly, the creditors repossessed their ships (Rembrandt & Sea Breeze I) and the passengers were stranded in Halifax.

[2catfamily]

If this is going to keep them out of CH. 11 they are in worst shape then I ever thought. Its just a ploy by some bean counter that thinks saving 5 or 10 cents a day is more important than pissing everyone off.

 

Wow, 5 or 10 cents a day?? Do the math, ALL the ship's in the fleet, every night in Every cabin for each passager in EVERY cabin. Much more than 5 or 10 cents a day.

[dclark]

I see a war right now between CCL and RCL. RCL is up to its neck in debt, CCL isn't. CCL is providing a superior product for much less $.

CCL is being predatious- they want RCL cruisers to sail their lines, even it means losing $. Afterall, he who has the most $ wins, right?

In time, RCL will default on their loans and enter bankrupcty. CCL will watch with a smile, maybe they'll lower the prices of their cruises even more, kind of like twisting the knife after it has been stuck in the gut.

Eventually, RCL will be liquidated and CCL will pick up some of the RCL ships for pennies on the dollar. At that time, the economy might be on the verge of recovery at which point all cruises will see their fares rocket up.Sound far fetched?

The battle already began some time ago. In January CCL fired a volley, offering peak season cruises(end of June/ beginning July) for as little $400 pp (port fees included!) for 7 day Alaska cruises on princess and HAL. RCL's answer was to pull a ship out.

RCL answer to compete against CCL was to build giant ships that lower operating costs. If they don't sail full, that plan is a wash. The world is not long for RCL. Those doubt this probably are unable to name all the cruise lines that CCL has acquired.

[Trainman-2]

Certainly the economy is not doing well but there are a lot of retirees like us on a fixed income that can still afford to cruise. Attractive deals make it even easier for us.

[cruisePRN]

 

. And if you read these boards, there are an awful lot of us cruise fanatics out here! We'll postpone that dental work (hate dentists anyway), drive our old cars until they die, live on macaronni and cheese and put every spare dollar into our cruise accounts (oh come on...you know you have one!) to make SURE we can cruise every year!!!

 

Not me, luxury items are last on the list where they belong. Dental and medical are on the top of the list followed by food and car and house long before vacations. Living above ones means and greed is what got this country in trouble to begin with.

[Luvadayatsea]

I agree with others who believe bankruptcy is unlikely. Ultimately it is lack of liquidity and insufficient cash flow that forces a company to file for bankruptcy (reorganization under Chapter 11). RCI has strong operating cash flow ($1 billion in 2008). While it may decline in 2009 due to the economic downturn, it will still be very positive.

 

RCI has already taken a number of steps to improve cash flow including elimination of the quarterly dividend, elimination of 400 shore-based postions, a freeze on new ship orders, and the sale of their 50% stake in TUI AG.

 

There are more steps they would take, if necessary, before considering bankruptcy, including spin-off their Pullmantur and CDF brands, restructure existing debt, obtain an additional equity infusion from either the 3 family groups that own 35% of RCI or through a public offering, sell or idle some ships to reduce itineraries in order to increase bookings on the remaining ships.

 

It's not valid to compare RCI to Merrill Lynch, Bear Sterns, or AIG, because they failed due to excessive off-balance sheet risk and excessive leverage backed by "assets" with depressed values. Unless RCI is using credit default swaps to finance their ships, a similar fate is highly unlikely.

 

As noted in another post, since RCI and its subsidiaries are foreign owned companies, I'm not sure how a bankruptcy would work. However, I think it's not likely in the near future.

 

That doesn't mean RCI won't struggle, and potentially they may face some difficult decisions. But for the foreseeable future, keep on sailing.