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RCL eyes 2020 loss, '21 booked position 'within historical ranges,' with pricing up

Royal Caribbean Cruises Ltd. expects a net loss for the first quarter ended March 31 and the 2020 year given the impact of COVID-19.

Prior to the outbreak, the company started the year in a strong booked position and at higher prices on a prior year comparable basis. Booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down low-single digits.

Due to the suspension in sailings, booking trends reflect elevated cancellations for 2020 and more typical levels for 2021 and beyond, the company said in an update Friday. Although it's still early in the booking cycle, the booked position for 2021 is 'within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020.'

45% whose cruises are canceled seek refunds

For canceled cruises, travelers are offered a 125% future cruise credit or a refund. As of April 30, approximately 45% of the customers had requested cash refunds. A 'Cruise with Confidence' flexible cancellation policy was recently extended and enhanced.

At March 31, RCL had $2.4bn in customer deposits, including approximately $0.8bn of FCCs related to previously announced voyage cancellations through June 11.

New bookings still coming for 2020

The company also continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings.

Monthly cash burn $250m - $275m

Monthly cash burn is estimated to average approximately $250m to $275m during suspended operations. RCL is considering ways to further reduce the average monthly requirement under a prolonged out-of-service scenario and operations start-up.


As of April 30, RCL had approximately $2.3bn in liquidity, all in the form of cash and cash equivalents. On May 4, the company increased its 364-day senior secured credit facility and drew $150m, further enhancing the liquidity profile.

With this, RCL 'should be able to weather another seven to nine months in a zero-revenue environment, with the range dependent on the extent of further cash refunds necessary,' William Blair analyst Sharon Zackfia said in a note.

Operating expenses have been significantly reduced.

Some cold layups

The company's ships are currently transitioning into various levels of layup with several ships transitioning into cold layup, further cutting expenses.

As earlier reported, the US shoreside workforce was reduced by 5,000, or approximately 26%.

Estimated average ongoing ship operating expenses and administrative expenses are approximately $150m to $170m per month during the suspension of operations. RCL said it may seek to further reduce this average monthly requirement under a prolonged no-revenue scenario.

Capex reductions/deferrals

Since its last earnings call in early February, RCL identified approximately $3bn and $1.4bn of capital expenditure reductions or deferrals in 2020 and 2021, respectively. These include $1.2bn of non-newbuild, discretionary capital expenditures and $1.8bn in reduced spending or deferred installment payments for newbuild-related payments which are currently being finalized.

Because COVID-19 has impacted shipyard operations, RCL expects delays for newbuilds previously planned for delivery in 2020 and 2021.

Debt holidays

Since the February earnings call, several additional actions to further improve liquidity and manage cash flow includeded increasing the capacity under revolving credit facilities by $0.6bn, and fully drawing on both facilities. RCL also entered into a $2.35bn, 364-day senior secured credit facility with an option to extend. This is secured by 28 ships with a net book value of approximately $12bn as of March 31.

RCL also obtained a $0.8bn, 12-month debt amortization and financial covenant holiday from certain export-credit backed facilities and amended its non-export-credit backed bank facilities to incorporate a 12-month financial covenant holiday

As of May 5, expected debt maturities for the remainder of 2020 and 2021 are $0.4bn and $0.9bn, respectively.

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