Royal Caribbean Bolsters Liquidity with USD 550 Mn to Counter COVID-19 Impact
Due to the impact of the ongoing oubreak of the coronavirus on the cruise industry, Royal Caribbean Cruises has increased its revolving credit capacity by USD 550 million bolstering the company’s liquidity.
The cruise giant said it was going to cut capital expenditures, operating expenses and take other actions to improve liquidity by at least a further USD 1.7 billion in 2020. The company is also planning reductions to the 2021 capital expenditures and operating expenses.
The announcement comes on the back of the U.S. Department of State Bureau of Consular Affairs’ advice to U.S. citizens, particularly travelers with underlying health conditions, against traveling by a cruise ship.
“CDC notes increased risk of infection of COVID-19 in a cruise ship environment. In order to curb the spread of COVID-19, many countries have implemented strict screening procedures that have denied port entry rights to ships and prevented passengers from disembarking,” the Consular Office said.
“In some cases, local authorities have permitted disembarkation but subjected passengers to local quarantine procedures. While the U.S. government has evacuated some cruise ship passengers in recent weeks, repatriation flights should not be relied upon as an option for U.S. citizens under the potential risk of quarantine by local authorities.”
The company had previously communicated that its 2020 guidance did not include the impact of the COVID-19 outbreak.
However, given the recent government actions and the heightened impact and uncertainty of changes in the magnitude, duration and geographic reach of COVID-19, Royal Caribbean withdrew its first quarter and full-year 2020 guidance.
“These are extraordinary times and we are taking these steps to manage the company prudently and conservatively,” said Richard D. Fain, chairman and CEO. “I am proud of the work our teams are doing to address this unprecedented situation.”
Royal Caribbean Cruises controls and operates four global brands: Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises. It is also a 50% joint venture owner of the German brand TUI Cruises and a 49% shareholder in the Spanish brand Pullmantur Cruceros.
Together these brands operate a combined total of 61 ships with an additional 17 on order as of December 31, 2019.