MIAMI — Royal Caribbean Cruises Ltd. reported a $1.4 billion loss, or $6.91 per share, in the first quarter of 2020, the company announced Wednesday.
The results showed a marked decrease from a profit of $249.7 million, $1.19 per share, during the same period last year. The adjusted per-share loss of $1.48 far exceeded Wall Street estimates of 81 cents per share.
“We are working in a very unprecedented environment,” said Chairman Richard Fain in an interview with the Miami Herald on Wednesday.
The first quarter earnings report comes more than two months after the cruise industry halted operations for the first time in history, amid the COVID-19 pandemic, on March 13.
Competitors Carnival Corp. and Norwegian Cruise Line Holdings have reported similar first quarter losses. Carnival Corp. reported a loss of $781 million, or $1.14 per share, with an adjusted per share loss of $0.22. Norwegian Cruise Line Holdings reported a loss of $1.9 billion, or $8.80 per share, with an adjusted per share loss of $0.99.
Miami-based Royal Caribbean Cruises Ltd. is the second-largest cruise company in the world with 51 ships across four cruise lines: Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea.
Since mid-March the company has cut or deferred costs by $3 billion in 2020 and $1.4 billion in 2021 by laying off 26% of its U.S. staff, reducing marketing expenses, and reducing staff on its ships, among other things. Other lines have taken similar measures; Carnival recently announced it had laid off 45% of its local workforce, while Norwegian has furloughed 20% of staff.
Despite the reductions, Royal Caribbean Cruises Ltd. said that while cruising is stopped, the company is burning through $250 million to $275 million per month in ship operating and administrative expenses as well as costs related to repatriating thousands of crew members who remain stuck on the company’s ships. On March 10, the company withdrew its first quarter and full-year 2020 guidance. On Wednesday, the company said it expects to incur net losses for second quarter 2020 and the full year, but does not know what the extent of those losses will be.
To stay afloat as cruising remains paralyzed, the company said it has secured $3.3 billion in liquidity through bonds collateralized by 28 of its ships. This week, Moody’s slashed Royal Caribbean’s unsecured credit rating by one notch to Ba2.
In an interview with the Miami Herald Won ednesday, Fain said he doesn’t know when the company will resume cruises. So far it has canceled all non-China cruises through the end of July. The company had previously canceled through mid-June despite the U.S. Centers for Disease Control and Prevention banning cruises in the U.S. through at least July 24.
When Royal Caribbean does relaunch, it will likely begin with just a few ships operating at a lower capacity at first, and traveling on short cruises, mostly to the company’s private island destinations.
“I would imagine social distancing will be an issue that would suggest you would not fill the ships,” Fain said. He suggested the cruise company would take cues from the reopening of land-based businesses. “We will learn a lot seeing society come back.”
Fain said the company is working with a group of health experts to figure out what policies it needs to have in place to protect passengers and crew from COVID-19 when it resumes operations.
“We’re not going to go (back to sea) if we’re not convinced that this is absolutely, we’ve done everything feasible to make this healthy and safe,” he said. “We need to make sure we explain how we reached those conclusions.” Company spokesperson Rob Zeiger said the company isn’t ready to announce which experts the company is working with.
Before cruising can resume, the company still needs to repatriate its crew members. Thousands remain on its ships with little reliable information about when they will be going home.