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Carnival (CCL) Extends Halt in Operations to Abide CDC Protocols

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Zacks Equity Research
·3 min read
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In a bid to meet the guidelines issued by the U.S. Centers for Disease Control and Prevention (CDC), Carnival Corporation & Plc CCL recently announced extension of voyage suspension for its Holland America Line and Princess Cruises till Apr 30 and May 14, respectively. Earlier, the cruise lines were suspended till Mar 31, 2021.

The cancelled voyages for Holland America Line include Alaska departures through mid-May, Mediterranean through early June and select Canada/New England voyages. For Princess Cruises, the cancellations include sailings in Caribbean, the California Coast along with Alaska and Europe cruises.

In this regard, Jan Swartz, president of Princess Cruises, stated, "We continue to prepare our ships for our return to service and we are eager to see our guests back on board to create summertime memories."

Nonetheless, the cruise lines are offering Future Cruise Credits (FCC) for its cancelled voyages. For Holland America Line, guests are entitled to 125% future cruise credits depending on the payment mode. For Princess Cruises, guests are entitled to receive 100% refundable FCC along with an additional 25% (non-refundable) of the amount paid. The FCCs can be used to book any voyages (depending on the availability) departing through Dec 31, 2022. Nevertheless, guests can also avail a refund, upon request.

Booking Trends For 2021

The cruise industry is driven to a standstill by the coronavirus-induced crisis. The pandemic is impacting Carnival’s operations and global bookings. However, it is still unable to predict the entire fleet’s return to normal operations.

Nevertheless, the company stated that its cumulative advanced bookings for the second half of 2021 capacity, currently available for sale, are at the higher end of the historical range. However, pricing on these bookings are down by mid-single digits compared with the second half of 2019 on a comparable basis. This reflects the effect of future cruise credits from previously-cancelled cruises being applied.

Price Performance

Coming to price performance, shares of Carnival have gained 30.7% in the past three months, compared with the industry’s 22% growth. Notably, the company is witnessing ticket price improvements for both of its North American and EAA brands, with robust ticket price improvements in its Caribbean deployment. Also, it is optimistic about its innovations that feature Ocean Medallion, PlayOcean and OceanView. These new offerings are anticipated to accelerate and expand engagement, thereby enhancing guest experience. This along with the commencement of vaccine rollout is likely to boost investors’ sentiments. Also, earnings estimates for 2021 have moved up in the past 30 days.

Carnival — which shares space with Norwegian Cruise Line Holdings Ltd. NCLH and Royal Caribbean Group RCL in the Zacks Leisure and Recreation Services industry — currently has a Zacks Rank #3 (Hold) at present.

Key Pick

A better-ranked stock in the same space is SeaWorld Entertainment, Inc. SEAS, which carries a Zacks Rank #2 (Buy) You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

SeaWorld’ 2021 earnings are expected to increase 76.3%.

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Carnival Corporation (CCL) : Free Stock Analysis Report
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