Cruise line operator Carnival is expecting a $2.9 billion loss in the third quarter of this year, as the industry is still subject to a no-sail order in US waters amid the coronavirus pandemic.

In July, the Centers for Disease Control and Prevention extended the no-sail order until 30 Sept. for cruise ships with the capacity to carry at least 250 passengers.

Due to health concerns, Cayman has closed its port to cruise ships until at least the end of this year.

In a US Securities and Exchange Commission filing, Carnival Cruise Line, the world’s largest cruise operator, said the preliminary net loss included a non-cash impairment charge of $937 million. Following adjustments for one-time items, the group expects a net loss of $1.7 billion in the three months ending in August.

However, the Miami-based company ended the third quarter with $8.2 billion in cash and cash equivalents.

Having raised funds in the bond markets on several occasions this year, Carnival hopes to raise another $1 billion through a stock offering.

Carnival’s CEO Arnold Donald said in the SEC filing that the group’s business relies solely on leisure travel which historically had proven to be far more resilient than business travel.

Six months after halting its operations globally, Carnival resumed service last weekend by completing a seven-day cruise with its Italian brand Costa. German brand AIDA is scheduled to resume operations next with sailings in the Canary Islands and the western Mediterranean during autumn 2020.

These initial cruises are subject to reduced passenger capacity and enhanced health protocols.

Arnold said, “Our portfolio includes many regional brands which clearly position us well for a staggered return to service in the current environment.”

To lower berthing and fuel costs, Carnival has paused new ship orders and is accelerating the exit of 18 vessels which will reduce its fleet capacity by 12%. This will leave the company with no new ship deliveries in 2024 and only one delivery in 2025, and allow it to pay down debt, Arnold said.

“With two thirds of our guests repeat cruisers each year, we believe the reduction in capacity leaves us well positioned to take advantage of the proven resiliency of, and the pent-up demand for cruise travel.”

The Carnival CEO said this was evidenced by advanced bookings for the second half of 2021 being at the higher end of historical averages.

Bookings for the second half of next year are comparable to 2018 and 2019 levels, while the pricing is lower “by mid-single digits”, as a result of the application of future credits from previously cancelled cruises.

Carnival is giving passengers the option to receive either enhanced future cruise credits or a refund. As of 31 Aug., approximately 45% of customers affected by the company’s schedule changes have received enhanced credits and 55% have requested refunds.

The cruise operator said despite minimal advertising or marketing, about 55% of bookings taken during the quarter ending 31 Aug. were new bookings, as opposed to rebookings using credits.

When Carnival and other cruise lines will able to return to Grand Cayman is uncertain.

Tourism Minister Moses Kirkconnell said last month that the cruise industry is an important tenet of the local economy.

“We look forward to welcoming cruise guests back to the shores of the Cayman Islands when it is safe to do so,” he said. “We remain in close contact with our cruise partners and we will continue to work together to take advantage of the opportunities available in 2021.”

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