MIAMI, May 8, 2020 /PRNewswire/ -- Royal Caribbean
Cruises Ltd. (NYSE: RCL) today provided a business update and the
Company's response to the impact of the COVID-19 pandemic.
"These are unprecedented times for all of us. Travel
restrictions and stay-at-home orders are important to slowing the
spread of the virus, but they have severely impacted our
operations," said Richard D. Fain,
Chairman and CEO. "We are taking decisive actions to
prioritize the safety of our guests and crew while protecting our
fleet and bolstering liquidity."
COVID-19 Related Suspension
The outbreak of COVID-19 has resulted in an unprecedented global
response to contain the spread of the disease. These global
efforts have resulted in travel restrictions and created
significant uncertainty regarding worldwide port closures and
availability. As part of the global containment effort, the
Company previously announced a voluntary suspension of its global
cruise operations from March 13
through at least June 11, 2020.
Continued disruptions to travel and port operations in
various regions may result in further suspensions.
"Our top priority is to ensure the safety of our guests and crew
during the suspension period and when we resume operations," said
Mr. Fain. "The Company's fleet is now either in port or at
anchor and we have developed strict protocols to protect our crew
that is still onboard our ships."
The Company has been developing a comprehensive and
multi-faceted program to address the unique public health
challenges posed by COVID-19. This includes, among other
things, enhanced screening, upgraded cleaning and disinfection
protocols and plans for social distancing. The Company will
continue to work with the Centers for Disease Control and
Prevention, global public health authorities and national and local
governments to enhance measures to protect the health, safety and
security of guests, crew and the communities visited when we are
out of service and once operations resume.
Update on Bookings
Prior to the outbreak of COVID-19, the Company started the year
in a strong booked position and at higher prices on a prior year
comparable basis. Given the impact of COVID-19, booking
volumes for the remainder of 2020 are meaningfully lower than the
same time last year at prices that are down low-single
digits. Due to the suspension in sailings, booking trends
reflect elevated cancellations for 2020 and more typical levels for
2021 and beyond. Although still early in the booking cycle,
the booked position for 2021 is within historical ranges when
compared to same time last year with 2021 prices up mid-single
digits compared to 2020.
The Company has instituted several programs in order to best
serve its guests: for cancelled cruises, guests are offered the
choice of future cruise credits valued at 125% of the initial
cruise fare paid in lieu of providing cash refunds. As of
April 30, 2020, approximately 45% of
the guests have requested cash refunds. For non-cancelled
cruises, the Company has implemented a "Cruise with Confidence"
policy.
As of March 31, 2020, the Company
had $2.4 billion in customer
deposits. This includes approximately $0.8 billion of future cruise credits related to
previously announced voyage cancellations through June 11, 2020.
The Company also continues to take future bookings for 2020,
2021 and 2022, and receive new customer deposits and final payments
on these bookings.
Update on Recent Liquidity Actions and Ongoing Uses of
Cash
"Since late January, we have undertaken several proactive
measures to mitigate the financial and operational impacts of
COVID-19." said Jason T. Liberty,
executive vice president and CFO. "Our focus is on bolstering
liquidity through significant cost cutting, capital spend
reductions, and other cash conservation measures. In
addition, the Company is considering additional financing
sources. We continue to evaluate all options available to us
to further enhance liquidity."
As of April 30, 2020, the Company
had liquidity of approximately $2.3
billion all in the form of cash and cash equivalents.
On May 4, 2020 the company
increased the 364-day senior secured credit facility and drew
$150
million, further enhancing the Company's
liquidity profile.
Reduced Operating Expenses
The Company has taken significant actions to reduce operating
expenses during the suspension of its global cruise operations:
- Significantly reduced ship operating expenses, including crew
payroll, food, fuel, insurance and port charges
- The Company's ships are currently transitioning into various
levels of layup with several ships in the fleet transitioning into
cold layup, further reducing operating expenses
- Eliminated or significantly reduced marketing and selling
expenses for the remainder of 2020
- Reduced workforce by approximately 26 percent of more than
5,000 shoreside employees in the US
- Suspended travel for shoreside employees and instituted hiring
freeze across the organization.
The Company estimates that its average ongoing ship operating
expenses and administrative expenses is approximately $150 million to $170
million per month during the suspension of operations.
The Company may seek to further reduce this average monthly
requirement under a prolonged non-revenue scenario.
Reduced Capital Expenditures
Since the last earnings call, the Company has identified
approximately $3.0 billion and
$1.4 billion of capital expenditure
reductions or deferrals in 2020 and 2021, respectively. The 2020
reductions and deferrals are comprised of:
- $1.2 billion, of non-newbuild,
discretionary capital expenditures and
- $1.8 billion in reduced spend or
deferred installment payments for newbuild related payments which
the Company is currently finalizing.
The Company believes COVID-19 has impacted shipyard operations
and will result in delivery delays of ships previously planned for
delivery in 2020 and 2021.
Debt Maturities, New Financings and Other Liquidity
Actions
Since the last earnings call, the Company has taken several
additional actions to further improve its liquidity position and
manage cash flow:
- Increased the capacity under its revolving credit facilities by
$0.6 billion, and fully drew on both
facilities
- Entered into a $2.35 billion
364-day senior secured credit facility with an option to extend
(secured by 28 ships with a net book value of approximately
$12 billion as of March 31, 2020)
- Obtained a $0.8 billion, 12-month
debt amortization and financial covenant holiday from certain
export-credit backed facilities
- Amended its non-export-credit backed bank facilities to
incorporate a 12-month financial covenant holiday
- Agreed with its lenders that it will not pay dividends or
engage in stock repurchases.
As of May 5, 2020, expected debt
maturities for the remainder of 2020 and 2021 are $0.4 billion and $0.9
billion, respectively.
The Company estimates its cash burn to be, on average, in the
range of approximately $250 million
to $275 million per month during a
suspension of operations. This range includes ongoing ship
operating expenses, administrative expenses, and debt service
expense, hedging costs, expected necessary capital expenditures
(net of committed financings in the case of newbuilds) and excludes
cash refunds of customer deposits as well as cash inflows from new
and existing bookings. The Company is considering ways to
further reduce the average monthly requirement under a prolonged
out-of-service scenario and during start-up of operations.
The Company continues to identify and evaluate further actions
to improve its liquidity. These include and are not limited
to: further reductions in capital expenditures, operating expenses
and administrative costs and additional financings.
On March 10, 2020, the Company
withdrew its first quarter and full-year 2020 guidance. The
magnitude, duration and speed of COVID-19 remains uncertain.
As a consequence, we cannot estimate the impact of COVID-19
on our business, financial condition or near or longer-term
financial or operational results with reasonable certainty, but we
expect to incur a net loss on both a US GAAP and adjusted basis for
the first quarter ended March 31,
2020 and the 2020 fiscal year; the extent of which will
depend on the timing and extent of our return to service.
About Royal Caribbean Cruises Ltd
Royal Caribbean
Cruises Ltd. (NYSE: RCL) is a global cruise vacation Company that
controls and operates four global brands: Royal Caribbean
International, Celebrity Cruises, Azamara and Silversea
Cruises. The Company is also a 50% joint venture owner of the
German brand TUI Cruises and a 49% shareholder of the Spanish brand
Pullmantur Cruceros. Together these brands operate a combined
total of 62 ships with an additional 16 on order as of March 31, 2020. They operate diverse
itineraries around the world that call on all seven
continents. Additional information can be found on
www.royalcaribbean.com,
www.celebritycruises.com, www.azamara.com, www.silversea.com,
www.tuicruises.com, www.pullmantur.es,
www.rclcorporate.com or www.rclinvestor.com.
Cautionary Statement Concerning Forward-Looking
Statements
Certain statements in this release relating to,
among other things, our future performance estimates, forecasts and
projections constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These statements
include, but are not limited to: statements regarding revenues,
costs and financial results for 2020 and beyond. Words such
as "anticipate," "believe," "could," "driving," "estimate,"
"expect," "goal," "intend," "may," "plan," "project," "seek,"
"should," "will," "would," "considering", and similar expressions
are intended to help identify forward-looking statements.
Forward-looking statements reflect management's current
expectations, are based on judgments, are inherently uncertain and
are subject to risks, uncertainties and other factors, which could
cause our actual results, performance or achievements to differ
materially from the future results, performance or achievements
expressed or implied in those forward-looking statements.
Examples of these risks, uncertainties and other factors include,
but are not limited to the following: the impact of the economic
and geopolitical environment on key aspects of our business, such
as the demand for cruises, passenger spending, and operating costs;
our ability to obtain sufficient financing, capital or revenues to
satisfy liquidity needs, capital expenditures, debt repayments and
other financing needs; the effectiveness of the actions we have
taken to improve and address our liquidity needs; incidents or
adverse publicity concerning our ships, port facilities, land
destinations and/or passengers or the cruise vacation industry in
general; concerns over safety, health and security of guests and
crew; the impact of the global incidence and spread of COVID-19,
which has led to the temporary suspension of our operations and has
had and will continue to have a material negative impact on our
operating results and liquidity, or other contagious illnesses on
economic conditions and the travel industry in general and the
financial position and operating results of our Company in
particular, such as: the current and potential additional
governmental and self-imposed travel restrictions, the current and
potential extension of the suspension of cruises and new additional
suspensions, guest cancellations, an inability to source our crew
or our provisions and supplies from certain places, the incurrence
of COVID-19 and other contagious diseases on our ships and an
increase in concern about the risk of illness on our ships or when
traveling to or from our ships, all of which reduces demand;
unavailability of ports of call; growing anti-tourism sentiments
and environmental concerns; changes in US foreign travel policy;
the uncertainties of conducting business internationally and
expanding into new markets and new ventures; our ability to
recruit, develop and retain high quality personnel; changes in
operating and financing costs; our indebtedness and restrictions in
the agreements governing our indebtedness that limit our
flexibility in operating our business, including the significant
portion of assets that are collateral under these agreements; the
impact of foreign currency exchange rates, interest rate and
fuel price fluctuations; vacation industry competition and changes
in industry capacity and overcapacity; the risks and costs
associated with protecting our systems and maintaining integrity
and security of our business information, as well as personal data
of our guests, employees and others; the impact of new or
changing legislation and regulations or governmental orders on our
business; pending or threatened litigation, investigations and
enforcement actions; the effects of weather, natural disasters and
seasonality on our business; emergency ship repairs, including the
related lost revenue; the impact of issues at shipyards, including
ship delivery delays, ship cancellations or ship construction cost
increases; shipyard unavailability; and the unavailability or cost
of air service.
In addition, many of these risks and uncertainties are currently
heightened by and will continue to be heightened by, or in the
future may be heightened by, the COVID-19 pandemic. It is not
possible to predict or identify all such risks.
More information about factors that could affect our operating
results is included under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our most recent annual report on Form
10-K, copy of which may be obtained by visiting our Investor
Relations website at www.rclinvestor.com or the SEC's website at
www.sec.gov. Undue reliance should not be placed on the
forward-looking statements in this release, which are based on
information available to us on the date hereof. We undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise.
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SOURCE Royal Caribbean Cruises Ltd.