Cruise lines have proven resilient in the face of setbacks like norovirus, measles, collisions and more. But can they recover from coronavirus? Watch the full video here:
— are all down more than 80% so far this year, putting the valuations of the big three at multiyear lows.
Over the years, the company has faced every disaster you can envision, from viral outbreaks, to colliding ships, flooding, and fires. But perhaps its two biggest scars are the sinking of the Costa Concordia off the Italian coast in 2012, killing 32 passengers, and an engine-room fire that left the Carnival Triumph without power for days, causing toilets to backup and human waste to overflow into rooms and hallways. That so-called "poop cruise" gripped global media.
Until the outbreak of COVID-19, sales for Carnival had been strong, rising every year since 2015, and up more than 10% from fiscal year 2018 to 2019. That's nearly double the revenue of Royal Caribbean and more than three times Norwegian's sales in fiscal year 2019. Net profit also dwarfs the competition, though the company hasCarnival's long-term viability ahead of the outbreak was also promising.
Getting credit investors on board comes at great cost to the company. The bulk of this new financing is from bonds"The cost of financing was particularly onerous, given this is an investment-grade entity with a substantial amount of collateral coverage," said John McClain, a portfolio manager at Diamond Hill Capital. "Its collateral coverage is 86 vessels, plus intellectual property, with a net book value north of $28 billion.
An image of Carnival Splendor cruise ship at the Overseas Passenger Terminal in Circular Quay on March 22, 2020 in Sydney, Australia."Even under the best case scenario where there's containment of this virus, it could literally take up to a year for things to get back to any semblance of normalcy," said Tuna Amobi, senior media analyst at CFRA Research.
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