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Norwegian Cruise, Carnival signal demand rebounding by 2021

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·2 min read
FILE PHOTO: Traders wait for stocks to resume trading on Norwegian Cruise Lines Holding Ltd. on the floor of the New York Stock Exchange in New York
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By Nivedita Balu and Helen Coster

(Reuters) - Beleaguered cruise operators signaled a return in demand for cruises that would set sail late this year or early 2021 after travel restrictions and no-sail orders due to the COVID-19 pandemic raised concerns about the future of the industry.

Norwegian Cruise Line Holdings Ltd and Carnival Corp said on Thursday customers were booking trips, even as there is no clarity over when cruises may set sail.

Shares of Norwegian, Carnival and Royal Caribbean Cruises Ltd, the biggest operators, reversed course following positive commentary on demand from Norwegian executives on a post-earnings call.

The cruise industry has been hammered by the coronavirus as health officials asked customers to avoid cruises on fears of catching the infection and extended port quarantines in Japan and California added to worries.

Norwegian Cruise's Chief Executive Officer Frank Del Rio said the company noticed a significant amount of new cash bookings in April and collected advanced ticket sales.

"It took decades to build this industry," Del Rio told analysts on the call.

"And in a matter of weeks, we dismantled it. And it's going to take not decades to build it up again, but a little time. And we just have to be patient."

Norwegian said slightly over half of the guests who have had their voyages canceled have requested cash refunds as of May 11, adding there is demand for cruises starting in the fourth quarter and accelerating through 2021.

Carnival said majority of guests affected by cancellations want to sail at a later date, with fewer than 38% requesting refunds.

"It is clear there is tremendous anticipation for a return to cruising," CEO Arnold Donald said in a statement.

Carnival also announced layoffs, furloughs, reduced work weeks and salary cuts as part of its efforts to stay afloat.

Norwegian swung to a quarterly loss of $1.88 billion on a $1.6 billion impairment charge as the COVID-19 pandemic brought the global cruise industry to a virtual standstill.

Excluding one-time items, the company reported a loss of 99 cents per share, while analysts on average had expected a loss of 50 cents, according to IBES data from Refinitiv.

(Reporting by Nivedita Balu in Bengaluru and Helen Coster in New York; Editing by Sriraj Kalluvila)