(Bloomberg) – Carnival Corp.’s discussions are accelerating, reflecting pent-up demand for speed, even if the industry is essentially.
In a quarterly update on Wednesday, the company said booking volumes in the first quarter of 2021 were about 90% higher than in the fourth quarter of 2020. Cumulative advanced bookings for next year are ahead of 2019, which has already been a particularly strong year .
“The company emphasizes this level of discussion has been achieved with minimal advertising and marketing,” CEO Arnold Donald said in the release.
The price for 2022 is also higher than comparable prices for 2019, David Bernstein, chief financial officer, said in a telephone conversation with analysts after the release.
Carnival shares rose 1.4% to $ 29 in New York. They have risen 34% this year.
The company’s bonds were among the top performers in the high-yield market on Wednesday, with the 7.625% note due to 2026 to 110.5 cents on the dollar, the highest since Carnival issued it in November. The cost of protecting Carnival’s debt from default for five years has fallen below 308 basis points, the lowest since March 2020.
Tensions have risen between cruise lines and the U.S. government as the industry continues to lie in its largest market. The Centers for Disease Control & Prevention lifted its ban on shipping in October, but replaced it with a phased approach to returning safely to sea, and no line won full CDC approval to sail again.
‘Very disappointed’
Donald joined other people in the industry on Wednesday, saying that cruises should be treated more like other tourism businesses, noting that he was “very disappointed” with the latest guidance from the CDC, which is asking cruise companies to routinely conducting tests for crews and strikes on ports on how to handle Covid-19 emergencies, among others.
‘Today you can board a plane, fly to a country, board a cruise ship and sail, fly back from the country and return to the United States. You have to do certain tests, etc., but you can do it, ‘Donald told Bloomberg Television. “And today, even vaccinated, you can not get on a cruise ship in the US”
The industry said the CDC was dragging its feet over the process, and Donald said Wednesday the CDC guidelines are not workable in their current form. But he also expressed hope for talks with the agency and the Biden administration that ‘would enable us to sail in July’.
Some of Carnival’s brands are already planning voyages to the Canary Islands, Italy, the United Kingdom and Greece. 59 vessels in the fleet with 90 ships are abroad and were not necessarily hampered by CDC policy. Donald said during the conference that he remains hopeful that the entire fleet can run by the end of 2021 or early 2022.
“We want the fleet to be fully operational by the end of this year, early next year, and that is our goal,” he said.
The Miami company also reported an adjusted net loss of $ 1.95 billion for the first quarter, greater than analysts’ expectation of $ 1.74 billion.
Enough liquidity
Bernstein said Carnival has enough liquidity to return to full operations and the company will take advantage of refinancing opportunities to reduce interest costs and extend the term.
Carnival has hit the corporate bond market five times in the pandemic and recently borrowed $ 3.5 billion in February to refinance a debt pile that swelled throughout the Covid-19 outbreak. The previous four offerings were for general corporate purposes, which boosted the balance sheet to increase liquidity, which now amounts to $ 11.5 billion in cash and short-term investments.
The cruise giant wants to refinance debt, as credit markets have risen sharply in recent years, thanks to the Federal Reserve and fiscal stimulus. When Carnival sold bonds in the pandemic for the first time last April – as an investment grade firm – it is paying investors 11.5% interest on debt acquired through assets such as first vessels and intellectual property. Two months ago, he was able to reduce his borrowing costs by half without imposing any collateral.
Carnival has been a high-yield company since June, when S&P Global Ratings joined Moody’s Investors Service to remove its investment grades. Moody’s said in February that it might reduce the company further, focusing on the timeline for Carnival to be back in service.
(Updates to the CEO’s comments on Bloomberg TV begin in the ninth paragraph.)
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