Royal Caribbean updates financial impact of coronavirus

Estimated 65 cents per share to date

The itinerary changes have an estimated impact on the company's 2020 financial performance of approximately 65 cents per share.

While not currently planned, if all remaining sailings in Asia were canceled through the end of April, the impact could be an additional 55 cents per share.

Softer bookings

‘While the early impact due to concerns about the coronavirus is mainly related to Asia, recent bookings for our broader business have also been softer,’ the company said. That is a change from Feb. 4 when RCL gave an update on its fourth quarter earnings call.

According to RCL, there are still too many variables and uncertainties to make a reasonable forecast for 2020. The company cautioned that if the travel restrictions and concerns over the outbreak continue for an extended period of time, they could materially impact overall financial performance.

Analyst reaction

Given the fluidity of the situation, analyst Sharon Zackfia said William Blair would be lowering its RCL estimate by the known incremental 40 cents at this time (the company had earlier signaled a 25-cent impact).

‘We also expect contingency plans to begin to be implemented to mitigate the impact, including the recent announcement that Celebrity Millennium has canceled the remainder of its Asian season to return early to the West Coast. Asia was expected to represent 17% of Royal’s capacity this year, including China at 6%,’ Zackfia said in a note.

She added: ‘Royal’s stock is already down 16% year-to-date on concerns related to the coronavirus impact, which we expect to be transitory. For perspective, Royal’s stock bottomed about 75 days after the start of swine flu headlines in 2009.’

Aggressive steps

‘It is important that every organization acts responsibly, and we have already taken aggressive steps to minimize risk through boarding restrictions and itinerary changes,’ RCL Chairman and CEO Richard Fain said. ‘Our shipboard and shoreside teams have been working tirelessly through these circumstances and I want to thank them for all of their extraordinary efforts.

‘We appreciate our responsibility to our guests and to each other, and our focus on public health is unwavering.’

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