The advantages of small ships, remote itineraries that are not dependent on destinations with human communities and customers who are 'eager to get out and explore' are all factors giving the company confidence that it will be able to operate some programs in 2020.
Testing is key
The ability to regularly test crew and, as a condition for embarking, all guests is essential, CEO Sven Lindblad said Friday. He indicated the company expects access to reliable tests in the near future.
'That single issue is necessary in order to reactivate,' he stressed. It's also essential to offer a 'verifiable' safe environment on board, to gain the crew's understanding and cooperation with protocols and to have customers' confidence.
On the latter, Lindblad reported 'many messages' from customers indicating their eagerness to travel. While the company's age group is older, making them more vulnerable to COVID-19, 'They want to live their lives. They won't be held back,' he said.
Slight uptick in FCC uptake
Most customers are taking future cruise credits instead of refunds, with a slight uptake in FCCs in recent weeks as people begin to see 'the light at the end of the tunnel.' Most are rebooking the 2021 program that had been canceled this year, so the bulk of current rebookings are for Q2 2021.
Since Lindblad focuses on wild and remote places, it will be possible to operate without the vast infrastructure the mainstream cruise industry requires. Docks and buses aren't needed.
Little shoreside support needed
'For us, we drop anchor, launch Zodiacs and kayaks to explore ... We control the logistics,' Lindblad explained. 'We need very little shoreside support so we can keep self-isolated,' so to speak.
In Alaska, for example, the company sails between Juneau and Sitka with little other port content, 'basically, one other place with human community. We will reduce that so there's less exposure to communities,' he added.
Currently, 14-day quarantines are required for arrivals. 'By July, I think [communities] will have a completely different view. By June, I don't think that will be the case,' Lindblad said.
However, borders need to open. So, for ships to explore the Norwegian Arctic, 'Norway needs to invite us to come.' Iceland, Greenland and the Galápagos are also key.
The line is making plans to activate some third quarter voyages should authorities permit, and has already sorted out the charter air arrangements to get people to the ships.
$6.6m returned to US
Lindblad qualified for the Paycheck Protection Program under the US CARES Act but returned the money after getting caught up in the outcry surrounding the funding of public companies. Sven Lindblad said the money was given back in the hope it will go to smaller entities like travel advisors, and he urged the US to create additional support programs.
Cash burn, liquidity, newbuilds
Reduced operating costs from ships out of service, the elimination of land-based expedition costs and $10m in deferred capital expenditures cut the company's cash burn from $30m a month to $10m to $15m, including principal and interest payments on loans. This excludes customer deposits for future travel and requested refunds.
CFO Craig Felenstein said Lindblad has 'substantial reservations' for the back half of the year and is 8% ahead in bookings for the second half compared to this time in 2019. Bookings are coming in for 2020, 2021 and 2022, including over $15m since March 1, and deposits and final payments are being taken for future travel.
During Q1 the company borrowed $107.7m under its first export credit agreement for the final payment on National Geographic Endurance, delivered in March. Subsequently, it drew down $30.5m under its second export credit agreement for the third installment payment for National Geographic Resolution, still on target for Q4 2021 handover. Export credit agencies and lenders are working to finalize loan payment deferrals, and the pursuit of additional liquidity ongoing.
No COVID-19 cases
The company was able to avoid any coronavirus infections to passengers and crew before laying up ships.
Addressing the potential resurgence of the virus in the winter, Lindblad pointed to the need for continuous testing of everyone and, likely, the emergence of a treatment and, eventually, a vaccine. 'At some point in 2021, I imagine we'll have all three of those things available, which completely changes the equation,' he said.