The company expects to have all ships operating by the summer and a return to profitability in the second half. The war in Ukraine, however, is likely to impact Europe load factors.
Operating cash flow and load factors have continued to improve sequentially with total revenue per passenger cruise day up versus record 2019 levels.
Return to profitability in second half
'Despite the impact of Omicron earlier in the year and the horrific conflict in Ukraine, we are encouraged by the strong demand for cruising and the steady acceleration in booking volumes,' Royal Caribbean Group President and CEO Jason Liberty said. 'Since the beginning of March, booking volumes have exceeded the record levels achieved in 2019 and we are optimistic that 2022 will be a strong transitional year as we return to full operations and profitability in the second half of the year.'
The $1.2bn adjusted net loss, or $4.57 per share, compares to the $1.1bn loss, or $4.44 per share, a year ago. Revenues totaled $1bn, up from $420m in Q1 2021.
54 ships back in service
By the end of Q1, 54 of 62 ships had returned to operations across the group's five brands, representing close to 90% of worldwide fleet capacity. The full fleet is expected to be back before the important summer season. It now numbers 63 ships with the delivery of Wonder of the Seas in Q1 and Celebrity Beyond in early Q2.
First quarter load factor was 57% with month-over-month sequential improvements. March load factors were 68%.
The group carried approximately 800,000 passengers in Q1 and achieved record guest satisfaction scores and record total revenue per passenger cruise day.
Total revenue per passenger cruise day was up 4% versus record 2019 levels driven by continued strong onboard revenue performance. Cash flow from ships in operation was positive with operating expenses per available passenger cruise days improved from Q4 despite inflationary pressures and elevated health protocol costs.
The group is now offering cruises in almost all of its destinations and expects to return to Australia for the local summer season in Q4. China remains closed to cruising and ships planned for China have been temporarily redeployed.
Royal Caribbean expects to operate approximately 10.3m available passenger cruise days in Q2 with load factors of 75% to 80%.
Cash flow turned positive in April
Operating cash flow was slightly negative in March and turned positive in April.
Q1 bookings across all markets were higher than in Q4. And throughout the first quarter, bookings improved each week. During March and April, booking volumes were significantly higher than the same period in 2019.
The second half of the year is booked slightly below historical ranges but at higher prices than 2019, with and without future cruise credits. Based on the strong and close-in nature of bookings, the company expects load factors will continue to improve each quarter and that fleetwide load factors will exceed 100% by year end.
War softens Europe demand
Bookings for Europe cruises improved throughout Q1 but softened due to the war in Ukraine with a bigger impact on Baltic itineraries. While bookings for Europe are now exceeding 2019 levels for the same period, the situation in Ukraine is expected to weigh on load factors in Europe this summer.
For 2023, all quarters are currently booked within historical ranges at record pricing.
Royal Caribbean Group said it's managing through inflationary and supply chain challenges, mainly related to fuel and food costs, as well as transitory costs associated with health and safety protocols, which are expected to weigh on 2022 earnings.
Liquidity was $3.8bn as of March 1.