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Recent cruise coronavirus cases handled well, a chance to learn: Del Rio

CRUISE Frank Del Rio.jpg
'While it's disappointing, I'm glad the ports, that the cruise companies that suffered these setbacks handled it very, very well,' Frank Del Rio said
Coronavirus outbreaks on several other cruise lines that have resumed sailing give an 'opportunity to learn,' Norwegian Cruise Line Holdings CEO Frank Del Rio said, adding that ports and the lines handled these situations 'very, very well.'

'There's no way to spin the initial re-emergence of COVID aboard vessels,' Del Rio said Thursday, 'but it's an opportunity to learn from it. This virus teaches us something every day. While it's disappointing, I'm glad the ports [and] the cruise companies that suffered these setbacks handled it very, very well.

'We haven't had a repeat of what happened earlier during the pandemic crisis.'

During the initial outbreak, some lines continued sailing and many ports turned ships away, leading to some crisis situations and deaths. 

'Next 60-90 days will be key'

As far as the US Centers for Disease Control and Prevention's stance on cruising, Del Rio said the agency had already received thousands of comments following its request for public input. Comments are open until Sept. 21.

Around this time, the joint NCLH-Royal Caribbean Group Healthy Sail Panel will be presenting its initial set of recommendations to the CDC, giving the agency 'a lot of information to 'comb through and digest.'

When the panel was first announced, iis initial recommendations had been expected by the end of August so it looks like they'lll be taking more time. 

Meanwhile, Del Rio said, it's hoped the pandemic will subside to more manageable levels and this will lead to a 'speedy return to service.'

However, he expects it would be second quarter 2021 before the fleet could return in earnest.

Break-even point

To cover ship operating expenses, NCLH's break-even point is approximately 40% of net revenue. Layering on corporate overhead costs, that would go up to 60%, based on pre-crisis 2020 EBITDA projections, CFO Mark Kempa ssid during the company's second quarter earnings call. 

Load factor guesstimates

The start-up would involve a limited number of ships and Del Rio estimated initial occupancy might be 50% to 60% — not for lack of demand, he asserted, but to keep healthy distancing on board.

For full-year 2021, he estimated occupancy might average 75%.

No plans to scrap ships

With a young fleet, NCLH has no plans to retire vessels.

Its oldest ship, Norwegian Spirit, just completed a $150m renovation in mid-February, so it's 'better than new,' Del Rio said. 'We love our capacity. We are the smallest of the Big Three so we're always wanting more, although during this pandemic, I'm glad I am the smallest ... We not only have the youngest fleet but we also have nine incredible vessels on order.'

In today's earnings release, the company signaled possible delays in new ship deliveries 'which may be prolonged,' but this was not discussed during the call.


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