Carnival: Voyages already cash-flow positive

Written by Nick Blenkey
Arnold Donald

Carnival Corporation & plc President and CEO Arnold Donald.: “We are very glad to be back doing what we do best.” [Screen grab from CNBC interview]

Shares in Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK), were up this morning as the cruise giant released a third quarter earnings update which showed some encouraging trends.

Though the company reported a U.S. GAAP net loss of $2.8 billion and adjusted net loss of $2.0 billion for the third quarter, it ended the quarter with $7.8 billion of liquidity, which it believes is sufficient to return to full cruise operations.

As of August 31, 2021, eight of the company’s nine brands had resumed guest operations and voyages for the third quarter of 2021 were cash flow positive and the company expects this to continue.

STRONG BOOKINGS

As we reported yesterday, the company expects to return over 50% of its total fleet capacity to guest cruise operations by the end of October. Today it reported that cumulative advanced bookings for the second half of 2022 are ahead of a very strong 2019. In addition, customer deposits increased $630 million in the third quarter of 2021, marking the second consecutive quarter since March 2020 the company has seen an increase in customer deposits.

“We are very glad to be back doing what we do best, delivering memorable vacation experiences for our guests, while doing so in a way that best serves the interests of public health,” said Carnival Corporation & plc President and CEO Arnold Donald. “Our team members are executing exceptionally well on our return to service, exceeding the expectations of our guests and taking guest satisfaction to new heights. Even at this early stage with intentionally constrained occupancy levels, our voyages are already cash flow positive.”

The company reports monthly average cash burn rate for the third quarter of 2021 was $510 million, which, it says, was better than previous guidance and in line with the $500 million monthly average cash burn rate for the first half of 2021.

As the company continues its return to service, it expects to continue incurring incremental restart related spending, including the cost of returning ships to guest cruise operations, returning crew members to its ships and maintaining enhanced health and safety protocols. The company expects the monthly average cash burn rate for the fourth quarter to be higher than the prior quarters of 2021, due to the timing of incremental restart expenditures.

Read the full update.

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