With its global cruise operations having been suspended since 13 March, it’s not at all surprising that Royal Caribbean Group experienced a bad second quarter financially.
The company reported a US$1.6 billion ($2.3 billion) loss in the three months to 30 June 2020, compared to a US$472.8 million ($664 million) profit in the same period a year earlier.
This year’s second-quarter results included a non-cash asset impairment loss of US$156.5 million ($219.8 million).
Royal Caribbean’s overall revenue fell 93.7 per cent to US$175.6 million ($246.6 million) in Q2.
The company expects to burn between US$250 ($351.1 million) million and US$290 million ($407.3 million) in cash per month during a prolonged suspension of operations, and had roughly US$4.1 billion ($5.8 billion) worth of liquidity as of 30 June.
Royal Caribbean noted the extended suspension of cruising has significantly impacted bookings for the remainder of 2020, which are “meaningfully lower than same time last year and at lower prices”.
The group announced last week that it would extend the suspension of sailings to include those departing on or before 31 October 2020, excluding sailings from China and Australia.
Although still early in the booking cycle, Royal Caribbean said its booked position for 2021 was “trending well” and within historical ranges.
For the booking period since the company’s last business update, approximately 60 per cent of the 2021 bookings are new and the rest are due to the redemption of future cruise credits and its ‘Lift & Shift’ program.
“Pricing for 2021 bookings is relatively flat year-over-year when including the negative yield impact of bookings made with future cruise credits; it is slightly up year-over-year when excluding them,” Royal Caribbean said.
As of 30 June 2020, the company had US$1.8 billion ($2.5 billion) in customer deposits, of which approximately $300 million ($421.3 million) correspond to fourth quarter sailings.
Royal Caribbean said that approximately 48 per cent of the guests booked on cancelled sailings have requested cash refunds.
“The COVID-19 pandemic is posing an unprecedented challenge to our industry and society,” Royal Caribbean chairman and CEO Richard Fain said.
“Our teams are working tirelessly to return to service soonest and doing so by developing new health and safety protocols to protect the well-being of our guests, crew and destinations we visit.
“In the meantime, we are using this time to refine our operations to be as efficient as we can while providing the great experiences that so many people are eagerly awaiting.”
Featured image source: iStock/mcarbo82