Carnival swings to third-quarter loss, talks up 2021 bookings

Cruise operator Carnival reported a net loss of $2.9bn (£2.25bn) for its third quarter on Tuesday, which included $0.9bn in non-cash impairment charges, swinging from a profit of $1.78bn a year earlier.

The FTSE 250 company made a net loss of $8.01bn for the first nine months of the year, compared to a profit of $2.57bn at the same time last year, as the Covid-19 pandemic forced the company to cancel cruises globally.

It said its cash burn rate in the third quarter, and the expected rate for the fourth quarter, were both in line with its expectations.

The company ended the quarter with $8.2bn of cash and cash equivalents, as the board said it expected to further enhance future liquidity opportunistically.

It noted that its Costa brand resumed guest cruise operations on 6 September, while AIDA announced plans to restart guest cruise operations during the fall.

A total of 18 “less efficient ships” had left, or were expected to leave, its fleet, representing about 12% of pre-pause capacity, and 3% of its 2019 operating income.

Cumulative advanced bookings for the second half of 2021 capacity currently available for sale was at the higher end of the firm’s historic range, the board noted, despite “minimal” advertising and marketing.

“Just six months after we paused cruise operations across our global fleet, this past weekend, we successfully completed our first seven day cruise on our Italian brand Costa,” said president and chief executive officer Arnold Donald.

“Soon, a second of our nine brands will resume guest operations, our German-sourced brand AIDA.

“Our business relies solely on leisure travel which we believe has historically proven to be far more resilient than business travel and cannot be easily replaced with video conferencing and other means of technology.”

Donald said the portfolio included many regional brands, which positioned Carnival well for a staggered return to service in the current environment.

“We continue to take aggressive action to emerge a leaner, more efficient company.

“We are accelerating the exit of 18 less efficient ships from our fleet.

“This will generate a 12% reduction in capacity and a structurally lower cost base, while retaining the most cash generative assets in our portfolio.”

Donald said that, with two thirds of its customers being repeat cruisers every year, it believed the reduction in capacity left the firm “well-positioned” to take advantage of the proven resiliency of, and the pent-up demand for, cruise travel, as evidenced by Carnival being at the higher end of historic booking curves for the second half of 2021.

“We will emerge with a more efficient fleet, with a stretched out newbuild order book and having paused new ship orders, leaving us with no deliveries in 2024 and only one delivery in 2025, allowing us to pay down debt and create increasing value for our shareholders.”

At 1350 BST, shares in Carnival were down 1.72% in London, at 1,083p.