Carnival Bracing for Net Loss in 2020 FY as a Result of COVID-19
Carnival Corporation expects to post a net loss for the fiscal year ending November 30, 2020, as a consequence of the blow coronavirus pandemic has had on the cruise market.
The cruise industry has been faced with major challenges as ports around the world have introduced restrictions on cruise ship calls in order to mitigate the potential spread of the virus.
Several ships reported infection cases on board, prompting a massive backlash from the public that blamed the cruise operators for the inability to maintain health safety onboard the cruise ships.
Port restrictions on docking and disembarkation followed by an increasing number of cases on board cruise ships, and subsequent travel advisories discouraging people to go on cruises enticed cruise operators to suspend their operations for a couple of months as government across the globe work to mitigate the impact of the pandemic.
Carnival has implemented a temporary pause of its global fleet cruise operations across all brands. Each brand has separately announced the duration of its pause.
“Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions,” Carnival said.
“The corporation believes the ongoing effects of COVID-19 on its operations and global bookings will have a material negative impact on its financial results and liquidity. The corporation is taking additional actions to improve its liquidity, including capital expenditure and expense reductions, and pursuing additional financing.”
To that end, the company has fully drawn its credit facility secured with a syndicate of lenders back in August 2019, equaling USD 3 billion for a period of six months.
The move has been ascribed to the need of increasing the company’s cash position and preserving financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak.
The proceeds from the loan will be available to be used for working capital, general corporate or other purposes.