Royal Caribbean Cruises said that the light at the end of the tunnel was “clearly visible”, after submitting recommendations for safe travel to the US Centers for Disease Control and Prevention.
The comments came as the group reported an adjusted net loss of $1.2bn for the third quarter.
The company resumed limited cruise operations outside the US in July with three vessels from TUI cruises and two vessels from Hapag Lloyd, and in September, for a limited period, with one Silversea ship. The company recently received approval to sail from the Singaporean government.
Richard Fain, chairman & CEO, told analysts: “It’s been almost seven months since we paused our cruise operations and every single day has been extremely frustrating and challenging. After seven months of agony the prospect of a further surge is beyond frustrating.
“However, the advances on the science fronts give us optimism that this coming surge will not be as devastating as the early surges in March and April, and it will lead to a better 2021.”
Commenting on the submission to the CDC, Fain said: “We intend to make our ships and environment a bubble that presents less risk of transmission than our guests would find on land. No other industry that I know of has agreed to do 100% screening of everyone. And I think that's a big part of what makes this a viable project.
“The entire industry here has agreed to abide by these recommendations, and we believe they can serve as a foundation for a gradual and methodical, healthy return to service.
“The panel has recommended that this process be carefully evaluated by independent outside observers and we will do that. There’ll be short cruises at first with limited destinations and controlled short excursions. But as we learn, and as the science continues to improve, we will expand.”
Royal Caribbean said that it was planning for a “very limited initial return and a gradual ramp up during the first half of 2021”. Deployment in the spring was expected to be focused on short sails from key drive markets in both the US and Asia Pacific regions.
When asked whether a Biden presidency was likely to have an impact on restarting, with analysts mooting an increase in restrictions to curb the pandemic, Fain said: “Before the startup in Europe, they used experts. They all worked with the governments, it wasn't a political issue, it was a scientific issue. I think the science is strong. And so I'm definitely hopeful that regardless of who's in power, the science will lead us to good answer.”
The company ended the third quarter with $3.7bn and available liquidity. Its cash burn was in the range of $250m to $290m per month during the prolonged suspension of operation.
Commenting on the ships that the group was able to operate in Europe, CFO Jason Liberty said: “In terms of breakeven relative on a ship-specific basis, are probably at or about breakeven. There are fixed costs that their ships probably don't cover as of yet. But the demand that we're seeing is relatively good.”
He added: “We continue to aggressively manage our spend and take opportunistic actions to bolster our financial position. Moreover, we are optimistic that with the gradual resumption of cruise operations, our cash flow from operations will sequentially improve, driven by an increase in the inflow of customer deposits."
Fain concluded: “Our current expectation is that our fleet will be back up and running certainly by 2022 and 2023. Capacity for us is likely to be higher, because of new ships coming online.”
Insight: The cruise sector was a source of early fascination for, well, the world, with plague ships unable to dock, floating outside ports as more and more passengers were taken ill and the rest appeared via their smart ‘phones all over the media. ‘There’s no such thing as bad publicity’ was finally proven wrong as speculation mounted as to whether people would ever sail again.
But what was a weakness - a closed environment - could be turned into a strength. What has become apparent during the pandemic is that the only way to control it is to absolutely control the environment people are in, as the French and Germn governments pointed out last week with their return to lockdown.
You can tell people to take the correct precautions all the live long day, but there will always be slip ups, always people are confused about how, when and where to wear masks. Cruises are a floating community and this could yet be their saving. Hotels should be so lucky.