Five European countries cut cruise lines a break on export credit payments

A Coast Guard Station boat crew escorts the cruise ship Zaandam to Port Everglades April 2, 2020. In recent weeks, the Coast Guard has supervised the removal of more than 250,000 passengers from cruise ships due to the COVID-19 pandemic. [U.S. Coast Guard photo]

The German Federal Ministry for Economic Affairs said today that Germany, along with four other European countries, is allowing cruise lines to temporarily suspend the repayment of export credits. the move is intended to protect European shipyards and their supplier base.

With the outbreak of the coronavirus, the cruise industry has come to a standstill.

The ministry says that the sudden deterioration in the cruise lines’ earnings situation has a negative implication for European shipbuilders and their order books.

“There is a risk that ship orders will be canceled and new construction investments postponed due to lack of liquidity,” says the Ministry. This would have fatal consequences for thousands of employees – both for the European shipyard industry and for its numerous suppliers.

The financing required for the purchase of new cruise ships is regularly secured through state export credit guarantees. Germany alone is currently securing payment obligations for the financing of cruise ships constructed in Germany to the tune of some $30 billion euros.

In order to prevent liquidity crises at the cruise lines, with negative effects on shipyards and suppliers, the governments of Germany, France, Finland, Italy and Norway have agreed on the principles of how cruise lines can suspend the debt repayment on their cruise ships financed with the help of state export credit guarantees, effectively a “debt holiday.

The Federal Government’s Maritime Coordinator Norbert Brackmann: “The agreement now reached with the European partners is helping the maritime economy in Germany and its suppliers. We provide liquidity relief for the cruise lines and thus stabilize the long-term business relationships of the European shipyards in the current crisis situation. This was imperative since the cruise business has almost completely stalled due to the corona pandemic. The measures taken also serve to protect thousands of jobs in the European shipbuilding industry and numerous suppliers. At the same time, we are reducing the risk of the government’s ship finance failing for the federal government.”

Shipping companies wishing to apply for a suspension of debt repayment can now contact the respective state export credit agencies through their lending banks.